Mattel Communicates Tariff Response
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Mattel communicated its plans as tariffs go into effect. Companies are in a tough spot. As a Financial Times writer explains, “Public companies have been reluctant to make concrete predictions over the effects of tariffs, as they struggle to keep up with rapid policy changes or seek to avoid antagonising Washington.”
Mattel depends on 40% of its production from China and 10% from Mexico. In the company’s fourth quarter financial report, guidance for 2025 includes the following:
Guidance includes the anticipated impact of new U.S. tariffs on China, Mexico and Canada imports announced on February 1st, and mitigating actions we plan to take, including leveraging the strength of our supply chain, and potential pricing.
Reading between the lines, students might understand that Mattel plans to reduce sourcing outside the United States (a CNBC article confirms plans to reduce the amount from 50% to 25% by 2027) and will try to absorb increased costs. In other words, Mattel is saying, we’ll be fine, but we might raise prices. In the end, as CNBC reports, Mattel, like Chipotle and many others, may have “consumers pay the rest.”
A New York Post headline is more blunt: “Mattel shares spike 15% after toy giant says it will raise Barbie prices because of China tariffs.” The article explains how toy companies, although vulnerable because 80% of their products are made in China, produce 80% new toys each year and have a captive audience: kids who want the latest toys and parents who will pay for them.
Price increases are one of those situations that is good or bad news depending on the audience. Either way, we could see it as an issue of integrity: Mattel’s language isn’t quite transparent (clear and accurate), although it’s appropriate for the primary audience of investors.
