While the world keeps turning, business in the U.S. is anything but normal this year, as some companies have come to a standstill.
On one hand, the U.S. toy industry is riding high on a 6% sales surge year-to-date, according to early 2025 data from Circana. That’s the good news. The bad news? Tariffs are hammering the industry, sending shockwaves through retail shelves and small businesses alike.
A Solid Start
Bucking the trend of recent years, both dollar sales (6%) and unit sales (3%) were up from January through April. The drivers, however, aren’t necessarily what we think of as traditional toys and games. New Pokémon releases and collectible sports trading cards are leading the charge, driving growth across categories and helping toys stand out as what Circana says is the fastest-growing tracked industry so far this year
Kidults Rising
One trend that’s impossible to ignore? Adults are officially in on the toy game.
Whether you agree with the “kidult” label or not (after all, the adult collector has always been there), the market that exploded during the pandemic has grown to such a force in the U.S. that in the first four months of this year, spending by consumers ages 18 and up topped a whopping $1.8 billion, up 12% from last year. Many adults are snapping up toys for display, collecting, or even resale.
I still feel that the kidult market should be both embraced and approached with caution. As I’ve noted over the years, there should be a real concern that toy and game makers are dropping too many eggs in the kidult basket at the expense of innovation for actual kids. The kids of today are the kidults of tomorrow, and if there aren’t new offerings for this generation to call their own, I just don’t see as robust a market in, say, 2045.
The Tariff Trap
But even as sales are on the rise, the tariffs levied by President Donald J. Trump and his Administration are casting a long shadow. While companies of all sizes have spent months racing to counteract or mitigate tariffs on imported goods, at one point as high as 145% on products from China, our biggest trading partner, the long-lasting collateral damage has been done.
Manufacturers and retailers aren’t absorbing the hit — they’re passing it on, and the American consumer is just starting to see and feel the impact. Following months of warnings with no immediate visibility at retail, prices at mass retailers quietly began spiking last month. One item featured in the March issue of The Toy Book, with a planned $49.99 MSRP, landed at Walmart this month with a $64.97 shelf tag.
That’s no small potatoes for families already grappling with inflation.
Small Businesses on the Brink
The tariff toll is even higher for small and medium-sized companies. Supply chain disruptions and increased production costs are squeezing these companies from all sides. We’ve seen production lines stopped and shipments put on hold pending new or updated trade deals. At press time, the current 30% tariff on China (a 10% baseline tariff + a 20% duty for the so-called “fentanyl tax”) still puts thousands of American jobs at risk as the cost now outweighs the margin. Retailers have closed, and manufacturers have locked the doors. Our Administration doesn’t seem to understand that the majority of the toys and games sold in the U.S. are designed, developed, and marketed by folks who live here. We’re a creative economy, and chasing the production ghosts of the past doesn’t make much sense. One smaller company in the collectibles space just let go of remote staff in 16 states.
One bright side is that the tariffs have indeed caused a spike in interest in American-made toys and games. However, for retailers looking to keep their shelves stocked, there is often no 1:1 replacement. Only certain categories can currently be made in the U.S., and that means dolls, action figures, die-cast vehicles, and electronic toys still have to be sourced elsewhere in the world. By design, tariffs could be used to protect an industry, such as steel, for example, but there simply is no American toy manufacturing base to protect.
What’s Next?
The toy industry’s resilience is on display; there’s no question about that. At the recent Licensing Expo, ABC Kids Expo, and ASTRA Marketplace & Academy, positivity trumped tariff talk. Despite all the chaos, spirits are bright as those in our business look ahead to a better tomorrow, rolling with the punches as best they can. But there is a limit to how much turbulence even the strongest players can absorb. As the year progresses, all eyes will be on Washington — and on toy departments — to see if the growth can keep pace with the headwinds.
This was supposed to be a growth year, and now it’s one of uncertainty. However, there is one goal post on the horizon that never changes, and you’ve probably heard this mentioned more than a few times: Christmas comes on December 25 every year, and it, alongside all the other festive holidays of the season, will remain a gift-giving moment.
James Zahn, best known as The Rock Father, is the Editor-in-Chief of The Toy Book, the leading trade publication serving the North American toy industry since 1984. He is also a Senior Editor of The Toy Insider and The Pop Insider and is frequently called upon for expert commentary on the toy industry. He has been featured in The New York Times and Forbes, and has appeared on Yahoo! Finance, CNBC, BBC, NBC, ABC, CBS, FOX, CNN, and more. Connect with him on LinkedIn or follow him on X and Instagram @therockfather.
This article originally appeared in Edition 16 of The Toy Universe Magazine
