It is known that U.S. children’s TV producers and distributors gain high profits licensing toys’ rights to merchandising companies. In turn, U.S. toy companies produce most of their merchandise in China and ship their items back to the U.S. This was until president Donald Trump announced a 145 percent tariff on Chinese imports.
Licensors and licensees will now need to renegotiate royalty agreements to account for tariff-related cost increases. This could strain relationships between IP owners and manufacturers, as seen in the toy industry’s efforts to split tariff costs among stakeholders.
For now, the immediate result of the tariff announcement was that the number of cargo-ships from China carrying toys bound for the U.S. collapsed. According to a report in The Wall Street Journal, toy store shelves will begin to empty by late May with no time left to replenish them for the Christmas season. The WSJ also reported that “nearly half of small toy businesses may soon go out of business,” affecting 16 million Americans working in retail and nine million in trucking.
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