A U.S.-owned toy manufacturing facility in Shaoguan, China, operated by Huntar Company Inc., is teetering on the edge of shutdown following the implementation of a 145% tariff on Chinese imports by the Trump administration on April 9, 2025. The factory, which has been a key supplier for major American retailers including Walmart and Target, has already reduced production by up to 70%. One-third of its 400 employees have been laid off, and remaining staff have seen their wages cut significantly.
Huntar CEO Jason Cheung revealed that the company now has only about a month of financial resources left. While the company is exploring relocation to Vietnam, the transition is proving to be difficult due to limited infrastructure, skilled labor shortages, and high startup costs in alternative countries. The factory, which had previously survived COVID-19 disruptions and earlier rounds of tariffs, now faces an existential threat from the latest U.S. policy changes.
The toy industry, which produces approximately 77% of toys sold in the U.S. in China, is undergoing a rapid and forced transformation. MGA Entertainment, the company behind popular brands like Bratz and L.O.L. Surprise!, has accelerated its plans to shift up to 40% of its production to India, Vietnam, and Indonesia within six months. Previously, only 10 to 15% of its toys were made outside China. CEO Isaac Larian acknowledged that while the move is essential to protect margins, it may lead to increased prices for toys produced in China.
Mattel, another industry giant, has also announced a reduction in its Chinese operations. The company will be operating only one Chinese factory by the end of 2025, down from four. Mattel is aiming for a more diversified manufacturing base so that no single country accounts for more than 25% of its global output. Currently, China still produces under 40% of Mattel’s products.
Retailers such as Walmart are feeling the pressure from higher costs. In response, Walmart has asked its Chinese suppliers to cut prices by up to 10% per tariff round in order to keep retail prices stable in the U.S. However, this request has sparked tensions, with Chinese officials warning that it could breach contractual agreements and disrupt market order. The Chinese Ministry of Commerce recently met with Walmart to address the growing concerns.
Meanwhile, U.S. and Chinese officials concluded a round of trade talks in Geneva with both sides calling the discussions “constructive.” U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng agreed to form a new economic dialogue mechanism, though no immediate decisions were made to lower the current high tariffs.
As the global supply chain continues to shift away from China, industry analysts predict a 15 to 20% rise in toy prices in the U.S. by the back-to-school season. Manufacturers, caught between rising costs and limited alternatives, are struggling to adapt quickly to the changing trade landscape.
The situation underscores the fragile nature of global supply chains and the long-term impact of geopolitical tensions on consumer goods. With American companies racing to find new manufacturing bases and trade talks offering little short-term relief, the challenges facing both businesses and consumers are likely to persist into the coming year.