Mattel and Other Retail Giants Brace for Rising Prices Amid Tariff Concerns

Mattel recently announced plans to shift the majority of its production outside of China. This decision represents a significant pivot in its overall manufacturing strategy as tariff talks rage on. The conglomerate recently took a $100 million charge as preparation for expected price hikes on its toys. This anxiety is seen across the entire retail industry. Today these protective tariffs are hitting major retailers such as Microsoft, Ford, Target, Home Depot and Lowe’s where it hurts. As a result, they’re getting squeezed to change their rebalancing practices.

Microsoft recently increased the recommended retail prices of its Xbox consoles and certain controllers, reflecting the broader trend of rising consumer prices. Now Ford is sounding the alarm. The automaker, for one, will soon have to start increasing prices across its portfolio because production costs are increasing. As retailers continue to face these pressures, they are looking at all sorts of ways to relieve pressures on consumers.

John David Rainey, Chief Financial Officer at Mattel, echoed the company’s dedication to “minimize price increases” in order to protect consumer purchasing power. He stated, “We try to work with suppliers to keep prices as low as we can.” Even he was forced to admit that this time they’re moving at a historic pace and scale. “We have not seen price increases at this magnitude in the speed in which they’re coming at us before, and so it makes for a challenging environment,” Rainey added.

The whole retail landscape is watching this closely. In particular, they are concerned about the newly settled 90-day reprieve—lowering duties on Chinese imports to 30%. Products from many other countries are still hit with a 10% tariff. Target, Home Depot, Lowe’s and other big box retailers will soon disclose how tariffs are expected to alter their pricing plans. To that end, their insights will be eagerly awaited as they pilot through these transformational waters.

With consumers more value-conscious than ever due to these rising costs, retailers face intense scrutiny to provide the lowest possible price. Rainey wants to undercut his competitors and keep prices low. He understands that shoppers are considering their options more closely than ever, due to the ongoing economic crisis.