Tariffs don't sound like a lot of fun. But it's one of the hottest topics in the 2019 toy market.
Bah, humbug, right?
The Trump administration is set to impose a 15 percent tariff on China-made toys on Dec. 15. Currently, there are no tariffs on Chinese toys.
It's tough to argue that tariffs would protect U.S. makers of plastic toys. With the prominent exception of big rotationally molded toys that are too expensive to ship overseas, most toy manufacturing moved offshore decades ago.
I don't expect big toy companies like Mattel and Hasbro to seriously consider reshoring a significant amount of work because of a 15 percent tariff. "Simply put, the toy industry is much more heavily dependent upon Chinese suppliers than most other U.S. Industries," Hasbro Senior Vice President Kathrin Belliveau said.
What we'll see, instead, will be higher prices for consumers.
Hold on, there's more fun to come. The toy market isn't all about politics. It's also about intellectual property. I'm talking about licensing characters and stories from movies, TV, YouTube and video games.
This year, that means two new Walt Disney Co. movies, Frozen 2 and Star Wars: The Rise of Skywalker, which are hitting theaters just in time for the Christmas shopping season. Shoppers are already looking for all things Elsa, Olaf, Anna in retail outlets and online.
If the Star Wars movie is a hit — and who would bet against that? — expect a last-minute rush on Rey, C-3PO and Kylo Ren, too.
Hasbro CEO Brian Goldner told analysts last month that toys based on the two movies are critically important to the company, which has pulled out all the stops on keeping the supply chain full.
Movies and toys have had a long and fruitful relationship. But toymakers don't just want to license intellectual property from entertainment companies. The big trend now is actually the opposite: for toy companies to create their own characters and license them to film studios.
The box office success of the Lego movies has other toy companies following suit, with movies based on Barbie, Hot Wheels, Transformers and more.
MGA Entertainment Inc. is taking that a step further, with its popular L.O.L. Surprise dolls. The company came up with the idea to capitalize on popular social media videos that show children "unboxing" toys. So it created several layers of fancy packaging, each with a surprise, with a plastic doll in the middle.
Hey kids, do you want to pretend you're a social media influencer? Of course you do! L.O.L. Surprise has a YouTube channel with 1.2 million subscribers.
All these strategies are helping toymakers sell toys again, which isn't easy in this era of smartphones and video games.
Loepp is editor of Plastics News and author of the Plastics Blog. Follow him on Twitter @donloepp.