Santa Claus has it easy.
He operates in a tariff-free zone, with a vertically integrated workforce of elves and an infinite runway of goodwill. But for real-world brands, retailers, and ecommerce platforms gearing up for the 2025 holiday season, the picture is far more complicated.
Earlier this spring, U.S. trade officials placed a temporary hold on new tariffs, offering brief relief to retailers and importers. But that pause hasn’t erased the risk—it has only delayed it. Brands and supply chain operators remain on high alert, knowing that tariff reinstatement or escalation could return with little warning. And for toy companies operating on long lead times, uncertainty itself can be just as disruptive as the tariffs they’re trying to avoid.
This year, toy sales—the hallmark of the holiday shopping rush—are running headlong into a volatile trade environment. With tariffs still looming over critical consumer goods, industry leaders are grappling with a fast-changing landscape: rising costs, disrupted supply chains, and increasingly cautious shoppers.
The First Domino: Walmart Rings the Alarm
In a recent earnings call, Walmart CEO Doug McMillon didn’t mince words: tariffs will force the retail giant to raise prices. While some costs may be absorbed internally, the broader message was clear—consumers should prepare to pay more.
The timing couldn’t be worse. Walmart, which moves approximately $50 billion in toys each year, sets the tone for much of the industry. And with nearly 80% of toys in the U.S. imported from China, the category sits squarely in the tariff crosshairs.
The National Retail Federation has echoed similar concerns, warning of price increases across categories, but highlighting toys as especially vulnerable. Even with the hold in place, pricing decisions and procurement strategies are already being influenced by uncertainty about Q3 and Q4 policy.
When Playtime Becomes a Luxury
The most direct consequence of tariffs is price inflation. Industry analysts estimate the cost of some toys could rise between 36% and 56% if current tariff proposals go into effect. Even if manufacturers absorb a portion of the increase, the burden on families—especially heading into the most emotionally resonant shopping season of the year—will be significant.
Hasbro and Mattel, two of the largest toymakers in the U.S., have already acknowledged that price increases are unavoidable. And while large brands may weather short-term challenges, smaller manufacturers may not.
But beyond raw pricing, there’s a more subtle shift underway: consumer confidence is weakening.
A University of Michigan report found expectations dropped 32% between January and April 2025—the sharpest decline in sentiment since 1990. Forrester’s data shows consumers are already cutting back, opting for value, skipping major purchases, and stockpiling essentials in anticipation of future increases.
Amazon CEO Andy Jassy captured the trend plainly: “We’ve seen heightened buying in certain categories that may indicate stocking up in advance of any potential tariff impact.”
This shift in behavior is not just economic—it’s emotional. Parents may begin questioning whether that brand-name toy is worth the premium. And as brand loyalty erodes, more consumers may turn to peer-to-peer marketplaces or off-brand alternatives. Gartner projects that by the end of 2025, 60% of consumers will have bought gifts from secondhand platforms.
The Pressure on Supply Chains and Small Businesses
While consumers face higher prices, businesses are staring down another challenge: uncertainty in supply chains.
Toy companies are re-evaluating sourcing strategies, fulfillment timelines, and product designs. According to the Toy Association, imports may drop by 20% this year as retailers pause or cancel orders. Small- and medium-sized toy companies—96% of the industry—are particularly at risk. One Toy Association survey found that 60% of smaller manufacturers had already canceled orders, and half feared they may not survive the year.
This vulnerability extends to every point of the supply chain. From freight forwarders to last-mile delivery, the ripple effects are real—and they’re happening during the most critical procurement window for holiday inventory.
“We have a frozen supply chain that is putting Christmas at risk,” a Toy Association spokesperson warned in The New York Times. “If we don’t start production soon, there’s a high probability of a toy shortage this holiday season.”
As the 2025 holiday season approaches, the toy industry finds itself at a precarious crossroads—caught between economic pressure, political uncertainty, and shifting consumer behavior. For brands, retailers, and manufacturers, now is the time to act with urgency, adaptability, and foresight. Whether it’s reassessing sourcing strategies, investing in more resilient logistics, or rethinking promotional playbooks, those who prepare now will be best positioned to weather the storm.
B2B Creative Marketing Manager
