By Connor Hart

After scaling back their reliance on China, Mattel and Hasbro now find a new batch of tariffs poised to hit the countries from which they source their toys.

Shares of the two companies both sank Thursday, a day after President Trump announced sweeping tariffs that raise levies on China and added starkly higher ones elsewhere.

Shares of Mattel tumbled 14%, to $16.99, on pace for their largest percent decrease in more than five years. Hasbro's stock price sank 12%, to $55.12, marking a slight rebound from its earlier low of $53.81.

Late Wednesday, Trump imposed a new 34% tariff on China, where roughly 80% of all toys are manufactured. The new tariff, effective April 9, will add to tariffs that existed previously.

When you exclude larger toy companies such as Mattel and Hasbro--which have taken steps to diversify away from China following tariff threats during Trump's first term and supply chain snarls amid the Covid-19 pandemic--about 85% of all toys produced are produced in China.

Mattel Chief Executive Ynon Kreiz has said that the company manufactures less than 40% of its toys in China. The maker of Barbie dolls and Hot Wheels cars ceased production at one of its plants in China in 2024, and it intends to shutter another plant in the country before the end of the year, according to its most recent annual filing with the Securities and Exchange Commission.

Besides China, Mattel's principal manufacturing facilities are located in Indonesia, Malaysia, Mexico and Thailand. Trump's new tariff plan includes a 32% tariff on Indonesia, a 24% tariff on Malaysia and a 37% tariff on Thailand. Mexico was noticeably absent from Trump's recent tariff announcement, though the country was subject to earlier tariff talks.

The company previously said it plans to have no single country account for more than a quarter of its total production by 2027.

Tim Kilpin, Hasbro's president of toys, licensing and entertainment, said last month that the company has actively worked to diversify its operations over the past few years, including opening new facilities in Vietnam and India. He estimated that about 40% of the company's toys are currently produced in China.

In addition to China and the U.S., the Nerf and Play-Doh maker produces a majority of its products in Vietnam, India and Japan, according to a recent SEC filing. Trump's new tariff plan additionally includes a 46% tariff on Vietnam, a 27% tariff on India and a 24% tariff on Japan.

"We continually look to diversify our manufacturing footprint," the company said.

Tariffs will likely have outsized effects on small businesses, which have fewer levers to pull when it comes to navigating higher costs, Greg Ahearn, chief executive of the Toy Association, said at the North American International Toy Fair last month.

"And it's not that there isn't production here in the U.S.," he said, noting that many paper and cardboard products, such as puzzles, are manufactured domestically.

"It's just that certain types of production make sense for China that don't make sense here," he continued. That is because China's supply chains have been built up over decades and, as a result, can't be replicated in the U.S. in the short- or medium-term.

Write to Connor Hart at connor.hart@wsj.com

(END) Dow Jones Newswires

April 03, 2025 14:18 ET (18:18 GMT)

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