Many toy stores such as JaZams in Princeton, New Jersey, saw a resurgence in business following the pandemic but thanks to Trump’s new tariffs, much of those gains have been wiped out.
Dean Smith, co-owner of JaZams, said he has had three different price hikes on his inventory in just over the second half of this year because of tariffs on China levied by the Trump administration. As a result, three quarters of his toy supply have become more expensive.
“During COVID, we were working 16 to 18 hour days. When tariffs were announced, we were working at the same level again trying to figure out how to get through it,” said Smith. “Next year will be really bad if things don’t change or get worse with tariffs.”
So far, toy stores nationally have absorbed much of the tariff increase as toy prices have increased by an average of 0.44 percentage points among urban consumers since President Trump took office in January. Mounting evidence points to prices increasing across toy stores nationwide for the holiday season. For many businesses, this spells panic for their long-term success.
More than 95% of toy manufacturers, wholesalers and distributors are small businesses according to The Toy Association. The toy industry is especially sensitive to any kind of tariff policy employed by the federal government since China manufactures around 80% of the toys Americans purchase domestically. Currently, there is a 20% broad tariff on all goods imported from China into the United States.
These operations don’t operate at large margins, meaning such a tariff will have a major impact on the business if it persists.
Prices for goods in general have remained above the Federal Reserve’s goal of 2% inflation and with the holiday season in full swing, toys have become one of the many products households will have to buy.
“Well maybe the children will have two dolls instead of 30 dolls,” said President Donald Trump during a cabinet meeting in April. “And maybe the two dolls will cost a couple of bucks more than they would normally.”
It’s a sentiment Sue Warfield, the President of the American Specialty Toy Retailing Association, agrees with.
“Parents will be paying more. Nothing will be the same for products that they would’ve bought a year ago,” said Warfield. “20% is still 20% when it was 0%.”
Despite more expensive toys, parents will still feel an obligation to buy presents for their children for the holidays. However, they may opt for the cheaper toy rather than a more expensive specialty option according to Warfield.
At JaZams, the tariff policy came as a shock to the system as Smith and his team scrambled to plan for the future. The uncertainty of today’s political and economic climate hurt the most as Trump seesawed between crippling and less devastating tariff rates. An April survey of toy companies conducted by The Toy Association showed nearly 50% of small and mid-sized businesses stated they may soon go out of business after Trump imposed a 145% tariff rate on China.
Even though tariffs have gone back down to 20%, which is still an increase for the industry, it is only temporary. This time next year, rates might jump back up if circumstances change.
As of today, manufacturers have increased prices on the majority of Smith’s inventory by 9-11% on average and he has passed on between 6-7% to his customers on average according to him. JaZams has managed to stay afloat amidst the chaos and uncertainty because of a strategic stockpile of toys Smith acquired in the very beginning of Trump’s tariff rollout.
But much of JaZams cash reserves were used up in order to facilitate the extra inventory and Smith simply does not have enough capital to pull it off again. Small and mid-sized toy stores like JaZams are still finding creative ways to continue serving customers and providing adequate employment for their workers as of now but they can only hang on for so long until their business starts to give.
“Tariffs are making my job as a buyer and the one who manages the finances a nightmare,” said Smith.