Mattel Inc. (NASDAQ: MAT) is navigating a turbulent period as U.S. tariffs on Chinese imports, now at a staggering 145%, reshape the economics of the global toy industry. Despite the Trump administration’s goal of bringing manufacturing back to American soil, Mattel’s leadership is clear: toy production will remain overseas, and American consumers should brace for higher prices.
Mattel CEO Ynon Kreiz recently addressed the impact of these tariffs, explaining that manufacturing toys in the United States is not on the table, even with the new trade barriers. “We don’t anticipate that happening,” Kreiz told CNBC, emphasizing that while much of Mattel’s design, engineering, and brand management happens in the U.S., production abroad is essential to maintain quality and competitive pricing. The company’s strategy is to offset the added costs through price increases in the U.S. market, rather than shifting manufacturing stateside.
For nearly a decade, Mattel has worked to reduce its reliance on China. By the end of this year, less than 40% of its products will be sourced from China, with a target to bring that figure below 25% within two years. This is a significant move, considering that industry averages still see nearly 80% of toys sold in the U.S. produced in China. Mattel is also moving production to other countries such as Indonesia, Malaysia, and Thailand, though these nations have also faced temporary retaliatory tariffs.
The financial toll is substantial. Mattel estimates that tariffs will add approximately $270 million in costs for 2025, beginning in the July quarter. The company has responded by raising its annual cost-saving target to $80 million, up from $60 million, and is implementing price hikes and reducing promotions to protect margins. Already, some price increases are evident: for example, a Barbie doll at Target jumped 42.9% in a single week in April, reaching $14.99.
Despite these pressures, Mattel reported first-quarter net sales of $827 million, beating analyst expectations, though it still posted an adjusted loss of $0.03 per share. The company also repurchased $160 million in shares during the quarter and reaffirmed its $600 million buyback target for 2025.
The unpredictability of the current macroeconomic climate and shifting tariff landscape led Mattel to withdraw its annual financial forecasts. This move reflects the broader uncertainty facing consumer goods companies as they attempt to gauge consumer spending, particularly heading into the critical holiday season.
Kreiz has advocated for the elimination of tariffs on toys, supporting the Toy Association’s push for zero duties to keep toys affordable for families. With about half of Mattel’s global sales coming from the U.S., and roughly 20% of its U.S. merchandise still imported from China, the company is under pressure to balance cost management with consumer accessibility.
Since the tariffs were introduced on April 2, Mattel’s stock has declined by about 19%. Shares also fell 2% in after-hours trading following the announcement of withdrawn forecasts and price increases. While Mattel is accelerating its diversification efforts, competitors like Hasbro have managed to retain their annual forecasts, buoyed by strength in other divisions.
Mattel’s experience highlights the far-reaching effects of protectionist trade policies on global supply chains and consumer prices. As the company adapts through supply chain shifts and price adjustments, the broader toy industry and American families alike are feeling the impact.
