Major retailer gets bombshell threat over tariff strategy

There’s been a lot of speculation about tariffs since late 2024, when they were front and center during the presidential election.

The reality is that U.S. consumers are fed up with higher prices. They’ve been battling rampant inflation since 2021 and are desperate for relief. But tariffs could deliver anything but.

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It’s too soon to know just how extensively tariffs will impact the U.S. economy, and how drastically they’ll drive the cost of consumer goods upward. But the fear is that even giant retailers like Walmart and Costco will only be able to do so much to shield consumers from price increases.

Related: Walmart makes drastic decision amid tariff threats

A number of major retailers have reassured consumers that they’re ready for tariffs and have strategies in place to mitigate them. But at the end of the day, tariffs remain a risk to consumers as well as retailers.

If consumers can’t keep up with their costs, they’re going to have to cut back somewhere. It won’t be surprising to see an increase in retail bankruptcies once tariff policies really take hold.

Major retailer gets bombshell threat over tariff strategy.

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Mattel sounds warning on tariff

Famous toymaker Mattel is a mainstay on big box store shelves. And fans of product lines like Barbie and Hot Wheels have long remained loyal to the brand.

But like retailers across the board, Mattel has concerns over the impact of tariffs on its business. And on its most recent earnings call, the company felt compelled to warn investors that tariffs could lead to higher prices.

Related: Hey Barbie! Mattel warns that tariffs could push prices higher

Mattel went so far as to pause its 2025 forecasts until it had more of a concrete idea of what tariffs would do to its business. And the fact of the matter is that most retailers really don’t have a full grasp of what’s to come just yet.

The best retailers can do at this point is prepare to be adaptable.

Mattel CEO Ynon Kreiz, meanwhile, said the company was “ready for the challenge” in the context of tariffs.

Mattel shifts strategy, gets harsh warning

To manage the impact of tariffs, Mattel recently shared plans to shift much of its production out of China. Mattel actually began slowly shifting production out of China about seven years ago and has been actively looking to diversify its supply chain.

But Kreiz said that the company is specifically not looking to move production over to the U.S.

Related: Popular discount retailer sounds tariff warning consumers need to hear

“We believe that production in other countries, where we can be efficient and more productive, is the best balance between manufacturing outside of the U.S. and continuing to develop products in terms of design and creativity in America,” said Kreiz in a CNBC interview.

President Trump was not happy to hear that Mattel planned to move away from China. And he went so far as to threaten a 100% tariff on Mattel specifically.

“They said, ‘Well, we’re going to go counter. We’re going to try going someplace else.’ That’s okay, let him go, and we’ll put 100% tariff on his toys, and he won’t sell one toy in the United States. And that’s their biggest market,” Trump said.

Toys in particular have been a hotbed issue in the context of tariffs. The toy industry has been lobbying for an exemption, with major players expressing concerns about price hikes and shortages ahead of the holiday season.

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At a time when consumers are already stretched thin, tariffs on toys could batter the industry.

“Toys are essential products for childhood development and early education, and our industry works tirelessly to ensure these products remain safe and accessible,” said Kathrin Belliveau, chief policy officer at The Toy Association. “Working with toy associations around the world, we are reaffirming our aspiration for toys to remain tariff-free globally.”