Toys for the holidays are a bellwether

Toys are a bellwether product category for what is happening in the larger U.S. economy. Import data indicates a 13% to 15% lower import value for the toy industry in 2025 compared to 2024. According to the Toy Association, the toy industry has an annual total economic impact of $155.7 billion on the U.S. economy. It’s estimated that three billion toys are sold annually in the U.S.

Approximately 80% of imported toys into the U.S. come from China. Toy imports have always been duty-free from any country in the world, until this year. This duty-free treatment has been based on the idea that toys do not represent a competitive threat to U.S. products, and thus do not require import taxes.

Toy prices increased 25% to 30% this year

But everything changed in 2025 under the Trump Administration. Now toy imports into the U.S. are subject to 30% tariffs from China, 20% from Vietnam, 25% from Mexico, and 19% from Indonesia—the top four countries supplying toys to the U.S. Target and Walmart, the top toy retailers in America, are selling Barbie Dolls and Spider Man action figures that were $10 last year for $14.99 this year. The import tariffs, now on toy imports, are being passed on to consumers. In addition, now consumers pay state and local sales taxes on the higher amounts when toys are purchased.

Descartes Datamyne maritime trade data show toy importers did not front-load inventory at the start of 2025 as usual. The peak month for importing products for holiday sales is October. This year, October toy imports were 15% lower than last year.

Toys are a bellwether

While toys aren’t a traditional “hard” economic indicator like housing starts or unemployment, they are often considered a reliable bellwether for consumer sentiment and discretionary spending power. Historically, the toy industry has been viewed as “recession-resilient” because parents often prioritize their children’s happiness even when cutting back elsewhere. But the data indicates that this year is different. Recent reports from giants like Mattel and Hasbro highlight how 10% to 30% tariffs on plastics, electronics, and fabrics—common materials in toy production—act as an early warning for consumer price hikes across the board. Price hikes due to tariffs are appearing in other industries, which in turn results in lower demand.

Coupled with higher unemployment, inflation, and slow job growth, the slump in toy sales during this holiday season paints a less rosy picture of the overall American economy.

Where is toy manufacturing going?

Most manufacturers of toys and other  consumer and industrial products are considering a move out of China or adding additional manufacturing capability in a second country, a strategy referred to as “China plus One.”

Again, the toy industry appears to be a bellwether in moving production, perhaps because toy products are simpler and less sophisticated than industrial products. Manufacturers aren’t abandoning China entirely but are rapidly building capacity in these key regions:

• Vietnam: Currently the most popular alternative. It offers geographic proximity to China’s existing raw material suppliers and lower labor costs. Companies like Mattel and Hasbro have significantly increased their footprint here.
• India: Emerging as the “next big hub” for labor-intensive toys (like dolls and action figures). Major players like Hasbro, Spin Master, and MGA Entertainment (Bratz, L.O.L. Surprise!) have moved up to 40% of some production lines to India.
• Mexico: Primarily serving the North American market. It is becoming a hub for larger, heavier toys where shipping costs from Asia are much higher. Mattel has consolidated some of its largest plants here.
• Indonesia and Thailand: These nations are picking up the slack for electronic and plastic-molded toys, benefiting from established trade agreements and growing industrial infrastructure.

At the Reshoring Institute (www.ReshoringInstitute.org), most clients are reevaluating their global manufacturing strategy. As an alternative to China, about 80% of our clients are seeking low-cost manufacturing, especially in Mexico.  For low-cost goods involving a lot of assembly labor, Mexico has become the preferred destination.

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