Chris Cocks is currently at the New York Toy Fair, where he was interviewed by Yahoo Finance to learn about the new tariffs imposed by the U.S. government, and other countries, and China, which remains the number one manufacturer of toys worldwide. Despite efforts to leave China, it’s still a long time to replace China, especially all Star Wars action figures are still there, so there are no tariffs yet. This means: price increases are imminent. Read more after jumping!
Chris Cocks talks about the impact of tariffs on toy prices
When asked about the new tariffs Chris Cocks said that if there was no change in price increases only a few months away, Hasbro would have to pass the tariffs to customers, and there was really nothing else, and the profit margins of toys were so low (we talk about 4-6% here) that it would have to pass a large 25% tariff. Of course, this will actually affect all the toys made in China, not just Star Wars.
It’s also very interesting to hear from the cock that Hasbro has been “cost-optimized design” for the past three years, and they’ll definitely try to offset some of the extra costs because of raising tariffs, as well as getting better deals from suppliers and mergers. I guess it’s a very euphemistic description of how modern Star Wars Action Characters lacks accessories or paint apps.
The Rooster also said that production in the United States will make things 50% more expensive, but the real challenge is not even the price, but finding the skilled workers needed to make toys, and the lack of logistics and supply chains about toy manufacturing, which was built in Southeast Asia over the past three decades but now essentially no longer exists in the United States. Since manufacturing went to China, the United States and many other Western countries have essentially lost the skill to produce many consumer products on a large scale, including toys. So building a factory in the United States will not only make consumers more expensive, but the real challenge is to get the whole machine working again first, and many of the necessary puzzles no longer really exist because it outsourced all of it to China and Asia decades ago.
How do you view potential price increases due to tariffs? Star Wars in particular is no longer a good place, and many people think that if the numbers get more expensive, I worry that sales could completely collapse. Would you buy a $30 Black Series or a $22 TVC number? At that time, the United States would actually have price parity with Europe. Hopefully, it is still possible to avoid fullness of the trade war, because only consumers are paying the price here – which is actually no one. Tariffs only make sense if you have an industry that can protect, but if the tariffs you impose are basically the main supplier of things you can no longer do and you have to buy them, the only person you punish you is your own.
You can watch the interview and read other statements by Chris Cocks on Yahoo Finance
Thanks to Jon Morgan for his mind!
