We recently hosted a community call with over 100 participants, to assess the impact of the evolving U.S. tariff landscape on the toy industry. Recording available here.
As part of our ongoing commitment to supporting ethical and resilient supply chains, the Ethical Supply Chain Program (ESCP) recently hosted a community call, to assess the impact of the evolving U.S. tariff landscape on the toy industry. The session hosted over 100 participants, made up of members and stakeholders across the supply chain to share experiences, raise concerns, and explore strategies for navigating these unprecedented changes. You can access the recording here.
At the forefront of discussion was the 145% tariff currently imposed on Chinese toy imports, alongside a universal 10% tariff on imports from other countries. While some sourcing countries, including Vietnam, Indonesia, and India, currently benefit from temporary exemptions, the broader unpredictability of tariff policy has introduced significant challenges for business planning and operations.
Electronics remain largely exempt, but toys are directly affected. China continues to dominate toy manufacturing, with over 80% of sourcing still concentrated there. Members expressed concern over the difficulty in adapting to these new tariffs in the short term.
Encouragingly, we’ve seen no major drop in ESCP membership or factory working hours since the tariff announcements. In fact, Q1 2025 saw an increase in new factory registrations – a sign of industry resilience and long-term commitment to ethical practices.
Shipments are beginning to resume as retailers cautiously move forward, and factories are preparing accordingly. However, urgency around tariff relief remains high. While larger, well-resourced factories may weather these tariffs for a few more months, smaller manufacturers are already under significant strain.
It was also noted that financial assistance schemes are available in some jurisdictions, but to a limited extent. Carmel reminded the community that downsizing in China is not straightforward due to labor protections, and nearshoring alternatives require time and infrastructure development.
Supply chain diversification continues, albeit gradually. Vietnam and Indonesia have emerged as the most advanced alternatives to China for toy manufacturing. ESCP’s Connect platform is supporting these efforts by helping members identify and onboard certified suppliers quickly and efficiently.
There is also growing interest in Northern Central America, particularly the Northern Triangle region, where the tariff rate remains at 10%. We encourage members to explore opportunities in these regions and to leverage free trade agreements, optimize product classification, and also review domestic manufacturing options where feasible.
Representatives from the Toy Association were unable to join the call due to urgent and important meetings as they continue to advocate at the highest levels for a urgent change in U.S. tariff policy. Their continued efforts and support in driving forward of the global zero-for-zero tariff initiative was commended. This campaign reinforces the importance of community and need for affordable, safe toys to support childhood development globally. We look forward to sharing updates from their efforts as they become available and hope to host an update call in the near future in partnership with the Toy Association.
We remain committed to supporting all members during this period. We are actively expanding resources and training for suppliers in new sourcing regions and will continue to offer practical tools to help navigate this evolving landscape. We are also considering response strategies to build in greater flexibility and offer additional assistance if disruption continues.
We urge all members to:
As always, we thank our members for their continued collaboration and commitment to ethical supply chain practices. Together, we can face these challenges with resilience and shared purpose.
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