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The growing uncertainty over trade between Beijing and Washington could affect the entire toy industry, boosting prices for American consumers and leaving Chinese producers out of the US market.
Chinese manufacturers make up nearly 85 percent of games and toys sold in the US, while China has a booming consumer market that is set to overtake the US as soon as in 2022, the South China Morning Post reports.
Profits from goods bearing the ‘Made in the USA’ label were hit by current US tariffs on raw materials from China, according to Aaron Muderick, founder of Pennsylvania firm Crazy Aaron’s Puttyworld, as quoted by the agency. At the same time, the toymaker expressed concern over losing momentum in the rapidly growing Chinese market.
“We’ve invested a lot of time and dollars. If it creates a market where the product is not welcome, where there are retaliatory tariffs that make it impossible for me to reach that consumer, then I lose,” he said.
According to Muderick, 2018 profits were hit by tariffs on steel, but he managed to avoid big losses from tariffs on rubber silicone, as he purchased supply in anticipation of a levy. The producer reportedly expects more of a profit hit this year if Washington increases tariffs on $200 billion worth of Chinese imports from 10 percent to 25 percent.
“If it goes to 25 percent, companies will go out of business, or they will cut back jobs,” said Neil Helfand, a lawyer specializing in trade.
However, Chinese producers have reported no drop in interest among American buyers so far, according to May Liang, the president of the China Toy & Juvenile Products Association.
“Some members feel uncertain, but the business is so far going OK,” she said. “We believe toys are really consumer-focused especially at holiday season, so we think toys should not be on the tariff list because it will harm consumers.”
The latest optimism expressed by US President Donald Trump over a potential trade deal with China shows that tariffs on toys are unlikely to be applied, according to the chief executive of the New York-based Toy Association, Steve Pasierb.
“This is a tweet-driven scenario we’re in here… so you could see that come back,” he told the agency.