[By Guancha Observer Net, Ruan Jiaqi]

"Trump's move will steal Christmas from families and children across the United States." Nick Mowbray, co-founder of the multinational toy giant Zuru and billionaire, accused his tariff policy of "paralyzing" his company producing toys in China, forcing him to raise retail prices in the U.S.

According to a report by Bloomberg on the 14th, Zuru produces robot pets Pets Alive, soft pellet guns XShot, and its diaper brands Millie Moon and Rascals in China for sale at Walmart, Target, and other American retailers. This makes the company directly face the "heavy blow" of Trump's 145% tariff on Chinese imports.

In an interview, Mowbray warned that based on the current tariff level, the retail price of American toys would at least double, "Since 80% of toys are made in China, we and most of our competitors are facing the same situation."

Zuru's soft pellet gun toy XShot. Official website screenshot.

According to American media reports, the 40-year-old Mowbray built his fortune on this fertile land of China.

More than 20 years ago, this New Zealander dropped out of university, moved to China with his brother Matt. Without knowing any Chinese and having no connections, they started their entrepreneurial journey by opening their first toy factory in Guangzhou with startup funds borrowed from their parents amounting to 20,000 New Zealand dollars (approximately $12,000).

After decades of operation, more factories were established, and Zuru has now developed into a powerful low-cost toy brand competing with American giants like Mattel and Hasbro. The two brothers have also become billionaires.

Mowbray has often attributed part of his success to China's complete and cost-effective supply chain. However, America's unreasonable tariffs on China are now putting his toy empire at risk.

Mowbray said that this year, the company planned to export toys worth about 2.2 billion New Zealand dollars (approximately $1.3 billion) to the U.S., accounting for half of its global sales.

"If these products are taxed at 145%, the tax amount will be close to 3 billion New Zealand dollars (approximately $1.72 billion), which is clearly unsustainable," he said. "Financially speaking, it is completely unfeasible." Bloomberg previously reported that Zuru's revenue in 2024 was 3 billion New Zealand dollars, with toys accounting for two-thirds of the sales.

According to Mowbray, the company is negotiating with retailers, some of whom have already suspended orders. He said, "We are constantly evaluating retail prices; they must increase significantly. We need to consider how much tariff cost we can bear."

U.S. media reported that since Trump announced the imposition of tariffs earlier this month, Mowbray and the senior management of Zuru almost hold daily conference calls to plan future strategies while closely monitoring discussions within the U.S. government regarding temporary exemptions from tariffs for certain industries.

Regarding Trump's hope to bring manufacturing back to the U.S. through tariff policies, Mowbray believes relocating Zuru's production lines to the U.S. "is not an option."

In an interview with Bloomberg last December, Mowbray emphasized, "Even if tariffs are imposed, China's supply chain remains unbeatable. In terms of efficiency, we cannot compete with it." At that time, he also stated that Zuru decided to "double or triple our bets on China."

Now, Mowbray hasn't changed his view. He pointed out that in the toy manufacturing sector, China has a very deep ecosystem with tightly integrated supply chains. "It would be difficult to relocate capacity to Vietnam or India because the supply chains there are far from reaching the level of China's."

Mowbray also mentioned that although the company is currently building a factory in Thailand, this diversification strategy has become complicated due to unpredictable tariff policies. In America's so-called "reciprocal tariffs," Thailand is proposed to be subject to a 36% tariff.

Zuru's initial IPO plan has been temporarily put on hold due to the tariff chaos. This toy manufacturer, which had a growth rate of 30% per year and a bright prospect, was suddenly forced into stagnation, leaving Mowbray puzzled. "We spent 22 years building all this, only to be destroyed so easily by just one or two people; it’s really baffling."

Under Trump's tariff measures, the toy industry is one of the hardest-hit sectors in the U.S. CNN pointed out that Chinese-made toys were previously exempt from tariffs, but now the 145% tariff means cheap toys will become "luxury items."

Data from the U.S. Department of Commerce shows that last year, the U.S. imported $17.7 billion worth of toys, 75% of which came from China. Statistics from the Toy Industry Association show that nearly 80% of toys currently sold in the U.S. are made in China.

MGA, headquartered in California, is one of the largest toy companies in the U.S. CEO Isaac Larian told American media that affected by tariffs, the company has no choice but to "raise toy prices by double digits."

"My 46-year business is now in jeopardy," Larian lamented, adding that finding raw materials for doll hair in the U.S. is extremely difficult. "There are no factories in America that can make doll hair. What can I do? Can I sell dolls without hair?"

MGA's LOL Surprise dolls. Official website screenshot.

Although MGA also has factories in Ohio and has the ability to produce more toys, Larian frankly admitted, "Americans simply don't want to work in factories."

Greg Ahearn, president of the Toy Industry Association, told CNN that China's lower labor costs help reduce toy production costs. Even with technological upgrades in recent years, toy production still requires manual work, such as painting doll "makeup."

He added that the vast majority of American toy manufacturers are small businesses, and for them, using existing infrastructure in China is much easier than starting from scratch in the U.S. Therefore, although some toy manufacturing is taking place in the U.S., there is no alternative to China in the short term.

Even toys labeled as "Made in America" may actually be made with Chinese components. Amy Rutherford, owner of a toy store in Virginia, told ABC that she has a plastic bracelet marked as "Made in America" in her store, but the beads on the bracelet come from China.

Rutherford sources toys from suppliers around the world. She emphasized that sometimes the suppliers are from the U.S., the UK, or Spain, but the actual manufacturing location of these toys is still China.

She also admitted that although she is willing to absorb some additional costs, she cannot bear all the 145% tariffs, and prices will inevitably rise. After the implementation of the tariff measures, the panda plush toy in her store will increase from $32 to $80, "No one will buy it."

Another American toy manufacturer, Basic Fun!, has its entire supply chain in China. Under the threat of tariffs, the company has suspended shipping of all its products.

CEO Jay Foreman was greatly troubled, "This is no longer just a problem for one company; it concerns the survival of the entire American toy industry."

This article is an exclusive contribution from Guancha Observer Net and cannot be reprinted without permission.

Original source: https://www.toutiao.com/article/7493786436043424297/

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