Will US-China Tariff Cuts Lower Toy Prices This Christmas?

The White House announced Sunday that the United States and China have agreed to cut tariffs on 77 categories of goods worth $60 billion, and toys are on the list, according to the New York Post. The deal could remove the current 20% tariff that US toy companies pay to import products made in China, though the exact list of affected items has not been finalized.

For families shopping ahead of the holidays, the announcement raises a direct question: will toys actually cost less this Christmas? Here is what is known so far, and what is not.

What did the US and China agree to?

The agreement followed a state visit last week by Chinese President Xi Jinping, the Post reported. Under the deal, the US and China set up a joint board that will approve lists of imported goods worth $30 billion from each country. China identified more than 1,600 US imports for relief, including agricultural goods, medical devices, and surgical robots. The US side includes 77 categories of goods, among them dolls, puzzles, and other play items.

The agreement is a change from earlier this year, when a 20% tariff applied to toys imported from China. That tariff has been a major cost driver for the industry because more than 80% of toys sold in the US are made in China, per the Post. Even Lincoln Logs, a brand with roots in Maine, shifted production east after its Maine factory closed in July.

Which toys are covered by the tariff cut?

The White House has not released a finalized list of which specific toy products qualify. The Post's report names dolls and puzzles as examples cited by the administration, but the broader category of "toys" covers a wide range of goods, from action figures to board games, and it is not yet clear whether all of them will get the same treatment.

Kathrin Belliveau, chief policy officer of the Toy Association trade group, wrote in an op-ed last week that the stakes are high for ordinary shoppers. "For American families, toys are price-sensitive purchases," Belliveau wrote. "When prices rise, families make difficult choices about what they can afford."

Will prices actually drop before Christmas?

That depends on timing as much as policy. Jay Foreman, chief executive of Basic Fun, the company behind Care Bears and Tonka Trucks, told the Post that shippers have increasingly delayed bringing goods into the country later in the year because tariff rules keep changing. If importers wait to see how the new relief plays out, some products may not reach store shelves with lower price tags until after peak holiday buying.

Even if the tariff cut takes effect quickly, it will not erase every cost pressure the industry is facing. Foreman said higher diesel prices during the Iran war have added strain, with some importers paying $600 surcharges per shipping container. "Diesel is used in factories, by the trucks that pick up goods at the ports and a lot of steam ships still use diesel fuel," Foreman said. "The cost of diesel fuel as well as other inflationary aspects are pushing against our ability to lower costs."

Why have toy prices been rising anyway?

Tariffs are only part of the picture. Fuel surcharges, inflation, and shipping costs have all added to what toy companies pay to get products from Chinese factories to US shelves, according to the Post's reporting. Despite those pressures, toy sales rose 17% in the first half of the year compared with the same period last year, an increase the Post attributes mostly to adults buying collectibles rather than traditional children's toys.

What happens next?

The joint US-China board still has to agree on the final lists of goods covered by the deal, and the toy industry is watching closely to see how fast that process moves relative to the holiday shipping calendar.

What to watch:

• Whether the US-China board finalizes the list of covered toy categories, and how soon.
• Whether retailers pass any tariff savings on to shoppers before Christmas, or absorb them to offset diesel and shipping costs.
• Whether toymakers who already ordered inventory under the old 20% tariff get any relief on goods already in transit.

Glossary

Tariff: A tax a government charges on goods imported from another country, typically paid by the importing company.

Trade board: In this case, the joint US-China group set up to approve which specific imported goods qualify for the new tariff relief.

Surcharge: An extra fee added on top of a shipping or freight cost, in this case tied to higher diesel fuel prices.

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