For small business owners, the end of the holidays marks the end of the most important time of year — particularly for small businesses like mine that sell toys. For countless retailers, the holiday shopping season can make or break the whole year.
As the CEO of Creative Kidstuff, this is a time of year when I reflect upon how grateful I am to serve our community and provide creative, inspiring, and educational toys for children for the last 36 years. We were lucky enough to enjoy a strong season, and our industry is expected to see overall growth in holiday sales when the federal government releases its figures.
But believe it or not, we are already planning for next year’s holidays, and we will soon start placing orders for the second half of 2019.
In the toy business, we must plan and purchase inventory months in advance. Unfortunately, planning is more difficult when faced with uncertainty caused by ongoing trade tensions between the United States and China. The Toy Association noted that another potential escalation of tariffs in March, from 10 percent to 25 percent on $200 billion in Chinese goods, would have a significant impact on toy prices and sales as those tariffs would affect the products we hope to put on the shelves for the 2019 holiday season. It is my hope that both countries will reach an agreement in the coming months that puts an end to the trade war and avoids tariffs on American businesses and consumers.
[Also read: Top retailers deflate hopes for record-breaking holiday sales]
We cannot afford another year marked by tariffs, which are ultimately taxes that hurt sales, impede production, and create uncertainty in the market for those of us who depend on it most.
Those of us in the toy industry are thankful we haven’t been hit hard by the tariffs so far, but that could change if the trade situation escalates. According to Tariffs Hurt the Heartland, a nonpartisan coalition representing thousands of workers, small businesses, and farmers across the country, American businesses paid $6.2 billion in tariffs in October. That was the highest monthly amount in U.S. history and twice what businesses paid a year earlier.
I’ve already witnessed firsthand how the cost of tariffs can disrupt business operations. One of my favorite vendors last season had to be removed from our catalog due to delays in production caused by steel tariffs. Now, as we look at products for the new year, we are hearing that even more tariffs could be on the way. I can’t help but wonder what the next gift-giving season will look like if tariffs are extended to cover all the toys the U.S. imports from China.
Larger toy companies may be able to shoulder the costs incurred by a rise in the price of production or a drop in revenue from unavailable toys, but smaller stores will struggle to adjust. Many will try to absorb those costs to avoid raising prices. That might be a viable short-term strategy, but companies can’t sustain increased costs and lower profits forever.
Toy companies and their products have brought joy and excitement to children for hundreds of years. In November, the toy industry alone accounted for over $20 billion in sales. Not only could tariffs affect the holiday season for children and their families next year, but they could also affect the livelihoods of the 334,000 people employed by toy manufacturers, wholesalers, distributors, and retailers in the United States.
The toy industry brings families together to play and is an economic driver that supports many jobs across different areas of the supply chain. If the toy industry struggles, so will American workers and the small businesses that spread joy with their products. We work daily to ensure that all families can enjoy a beautiful holiday season together, year after year. I hope the administration will quickly find a path forward to end the trade war.
Roberta Bonoff is CEO and President of Creative Kidstuff, a collection of six toy stores throughout Minnesota that offer customers an assortment of developmental and educational toys that are creative, innovative, and imaginative.
