If President Trump pursues the proposed 100-percent tariff on Mattel, the Hot Wheels parent corporation, it could not be too long before consumers face higher prices for the cherished little cars. Trump’s planned tariffs on Mattel’s CEO, Ynon Kreiz’s comments on production diversification, may be reflected in higher prices for customers throughout the country.
Tariffs: A Double-Edged Sword
In a recent press meeting with the White House, Trump said if Mattel continues to increase production globally instead of bringing it back to the U.S., then he would be forced to impose a 100-percent tariff. In an interview on CNBC, Kreiz confessed that it would not be possible to relocate all production domestically. Instead of an exclusive investment in assembly in the US, Mattel plans to leverage the spread of its production among various countries to avoid high tariffs on Chinese imports.
Kreiz pointed out that the design and engineering stages occur in the U.S., but processing occurs offshore. This strategy enables Mattel to maintain its price without much for the consumers. However, Trump’s stance implies that tariffs might increase the price of consumer goods in the United States. Such an arrangement resonates with economic concerns raised to the effect that, in most cases, American shoppers would end up paying more.
My View on the Situation
In my opinion, the tariffs can cause more problems than benefits. The aim is to reinvent U.S. workplaces, but the end result may lead to goods that are not cost-friendly for consumers. As a parent, I typically resort to cost effective toys like Hot Wheels for the convenience of keeping children entertained. If a 100% tariff were introduced, it could cost a lot and jeopardize affordability for many families. I believe the smartest move would be to encourage investments into production in the U.S. through incentives and not look to tariffs that will damage families at the cash register.
End Note
The escalating global tension translates to added risks to enterprises such as Mattel. Although tariffs might seem like a useful policy for fostering national growth, it’s also worth considering the enormous effects such policies may have on the economy and household spending. Such effects should be considered by policymakers prudently, and strategies sought to promote economic progress without disadvantaging consumers.
