President Trump’s China tariffs are threatening Christmas.
Toy makers, children’s shops and specialty retailers are pausing orders for the winter holidays as the import taxes cascade through supply chains. Factories in China produce nearly 80 percent of all toys and 90 percent of Christmas goods sold in America.
The production of toys, Christmas trees and decorations is usually in full swing by now. It takes four to five months to manufacture, package and ship products to the United States.
Mr. Trump’s 145 percent tariffs have caused a drastic markup in costs for American companies. Most of the entrepreneurs that have shared their plans with The New York Times have not yet canceled their orders. They hope that the president will back away from the tariff brinkmanship.
But the alarm in the industry is palpable, with the companies predicting product shortages and higher prices. Some business owners, citing how crucial holiday sales are to their bottom lines, are consulting bankruptcy lawyers.
“We have a frozen supply chain that is putting Christmas at risk,” said Greg Ahearn, chief executive of the Toy Association, a U.S. industry group representing 850 toy manufacturers. “If we don’t start production soon, there’s a high probability of a toy shortage this holiday season.”
For America’s Christmas industry, Chinese manufacturing is unmatched in its production speed and capability. Toy makers overhaul large portions of their product lines every year to adapt to the changing preferences of children. From materials to machinery, China’s factories are one-stop shops for importers.
Kara Dyer, founder of Storytime Toys, a maker of children’s books with playset puzzles, usually places a big holiday order with her Chinese factory in the first two weeks of April to have enough inventory by mid-July. The Christmas holidays account for about two-thirds of her annual revenue.
Ms. Dyer placed a small order of $30,000 worth of products before the latest tariffs, never expecting they would surge to such high levels. That shipment is en route to the United States. When it arrives, she said, she expects to owe $45,000 in tariffs. The shipment will provide the company with enough inventory for a few months, and she said she would probably raise prices at least 20 percent to cover the tariff costs. But she is waiting to make a big holiday purchase.
“I’m going to hold out hope for another two weeks that the tariffs will be removed and I’ll be able to place the order,” she said. “But if not, I will have to put my business on pause. I will definitely not place an order if the tariffs are in effect. It wouldn’t make any sense.”
In a Toy Association survey of 410 toy manufacturers with annual sales of less than $100 million, more than 60 percent said they had canceled orders, and around 50 percent said they would go out of business within weeks or months if the tariffs remained.
At West Side Kids in New York City, the shop’s owner, Jennifer Bergman, 58, is concerned that she may not have any toys to sell at Christmas. And the toys she can get her hands on could cost twice what they did last year, which would crimp her sales during the most important time of the year.
Toy companies are already marking up prices 10 to 20 percent, said Ms. Bergman, whose mother opened the store 43 years ago. She said that she would try to buy as much as she could now, but that the shortages were already starting. She had placed a large order of scooters to arrive for the summer. But the importer rerouted the shipment to Canada because it did not want to pay the tariff. She was told that she would get only a portion of her order.
If the tariffs remain, Christmas will be like “something we’ve never experienced before,” Ms. Bergman said. People will be standing in line to buy things that cost twice or three times as much as before, she said. Her business was already under pressure from competition by Amazon, but she fears that the tariffs will deliver a final blow.
“I don’t think I will be in business for Christmas,” said Ms. Bergman, who added that she was consulting a bankruptcy lawyer.
Nick Mowbray and his brother, Mat, founded Zuru Group in China, making an assortment of plastic dart “blasters,” water balloon accessories and bubble guns that are sold at Walmart and Target. He said retailers were not placing holiday orders. Zuru has cut its marketing budget for the holiday season in half, to $60 million, because it expects to be selling fewer products.
Mr. Mowbray, a native of New Zealand, said everything was in “a holding pattern.” If the tariffs remain at 145 percent, he expects prices for consumers to increase around 50 to 100 percent.
“That will be unaffordable for a lot of families,” he said.
Mr. Trump has in recent days struck a conciliatory tone toward China and the tariffs, fueling some hope among business owners that he may exempt industries that do not pose a national security threat.
Mr. Ahearn from the Toy Association said he was in Washington last week to lobby for a 24-month reprieve, which could give companies time to find ways to make their products in the United States.
But even if Mr. Trump grants importers temporary relief, significant disruptions will occur as companies rush to fulfill orders. Shipping costs are expected to surge, similar to the frenzy during the Covid pandemic, when a shortage of shipping containers led in some cases to a tenfold increase in freight prices.
Christmas is the busiest time of year for Aldik Home, a home goods store in Los Angeles. It generates more than two-thirds of its annual sales in the final three months of the year, selling artificial Christmas trees, wreaths, ornaments, lights and other decorations.
Larry Gold, the store’s owner, said he had worked with a Chinese factory for many years to design Christmas trees. He places the order in January for shipment in June or July. This year, he planned to send seven 40-foot containers from China loaded with $600,000 worth of trees. The current tariff would require him to pay nearly $1 million at once.
“Right now, we’ve asked them to hold up and wait,” Mr. Gold, 72, said.
Last year, the store sold seven-and-a-half-foot trees for about $1,000. Mr. Gold said he would have no choice but to pass on the tariff cost to shoppers, which would put the price of that same tree at more than $2,000. He said that price would in effect “kill the product.”
“I can’t believe anybody in this country who is buying trees from China will pay the 145 percent duty, because they’ll never sell them,” Mr. Gold said.
At this rate, he said, he will not bring in the trees, and his store, which has been open for decades, will have nothing to sell during the most crucial period of the year. He said he would probably be forced to close, costing his 40 employees their jobs.
“There won’t be a Christmas industry here,” Mr. Gold said. “The product all comes from China.”
Aaron Krolik contributed reporting from New York.
