Major toy manufacturers saw their shares soar on Monday following an announcement that the United States would temporarily ease tariffs on Chinese imports. The move suspends most trade barriers for a 90-day period, significantly reducing the previous 145% tariff imposed on Chinese goods to a more manageable 30%. This development provided much-needed relief to an industry heavily dependent on Chinese manufacturing.
Investors responded swiftly and positively to the news. Mattel’s stock jumped over 10%, while Hasbro rose 6.5%. Jakks Pacific recorded gains exceeding 15%, and Funko led the surge with a dramatic increase of 46.4%. The rally was particularly notable for Hasbro, whose stock price returned to levels last seen in early April—prior to the initial announcement of heightened tariffs. Other toy stocks, while still trading below their April 1 benchmarks, experienced substantial rebounds.
The toy industry has been among the sectors most vulnerable to trade tensions with China. Many companies rely extensively on Chinese factories and supply chains. Analysts estimate that approximately 40% of the toys sold in the U.S. by major brands like Mattel and Hasbro are sourced from China, leaving them highly exposed to fluctuations in trade policy.
In anticipation of the earlier tariff hike, investors had heavily penalized toy stocks, fearing supply disruptions and cost increases. Hasbro had previously warned that maintaining the 145% tariff could result in a hit of up to $300 million to its earnings. Similarly, Mattel announced it was implementing various measures to offset the financial strain caused by the tariffs, including passing some of the added costs on to consumers through price increases in the U.S. market.
Both companies had issued financial guidance earlier in the year that was based on the assumption of a 25% tariff level. However, the economic landscape has shifted rapidly. Earlier this month, Mattel withdrew its full-year forecast, citing the unpredictability of global economic conditions and the evolving status of U.S. tariffs. Hasbro maintained its guidance but cautioned investors about the risks associated with the ongoing tariff environment.
The temporary rollback of tariffs has brought a wave of optimism to an industry that had been bracing for prolonged financial challenges. While the 90-day reprieve offers breathing room, the future remains uncertain as companies await more permanent trade policy decisions.
READ MORE: