While toy demand rides its own unique growth arc, questions loom about how international trade in the products will fare under a new U.S. government.
Analysts are predicting U.S. toy consumption this year will grow as much as 6.5 percent, continuing a growth trend evident for the past several years. The U.S. market is worth more than $21 billion a year, accounting for about a quarter of world demand, and is very dependent on international supply chains to meet children's desires.
The market growth underlines the vitality of the U.S. toy industry, stated Toy Industry Association President and CEO Steve Pasierb in a recent statement.
“Consumers are buying toys and games fueled by innovation in practically every category — from technology to collectibles to licensed products and [toys that encourage science, technology, arts and math] that are both fun and educational,” he elaborated.
Imports are crucial to U.S. markets. About 90 percent of U.S. demand is met by shipments from foreign sources, according to TIA data. Any disruption in the traffic is sure to impinge on the happiness of millions of American children.
It's too early to know how the incoming U.S. federal administration will view existing trade treaties and global trade, but statements made by President-elect Donald Trump during his election campaign certainly caught the attention of global traders in toys and a host of other goods.
“In the coming months, TIA plans to educate newly-elected members of Congress on industry priorities such as implementation of the recently passed chemical reform legislation, streamlining regulatory burdens, access to international markets and general policies that help small businesses,” Pasierb stated shortly after Trump's election.
Trump has threatened to tear up or renegotiate the North American Free Trade Agreement, and has complained about trade practices of China, the major source of toys entering the United States.
Mexico, a signatory to the NAFTA treaty along with the United States and Canada, has become an important toy source for U.S. markets. More than $700 million of toys and games were imported from Mexico into the United States in 2015, according to Statista GmbH, an internet-based statistics supplier.
Mexico has attracted major investments by toy OEMs who want to capitalize on the country's preferred status in NAFTA and relatively low labor costs. Lego A/S is perhaps the biggest current investor in Mexico toy production.
The Danish toy giant is spending more than 100 million euros ($107 million) to expand its eight-year-old toy factory in Monterrey, Mexico. The project includes adding 2 million square feet at the site, plus a huge number of injection molding machines and other equipment to package and warehouse its iconic plastic bricks and related toys. The facility, heavily oriented to exports to the United States, could double its production capacity in the expansion program.