Earlier this week, we heard from our principal distributor who stocks several key lines, among them the Hobby Master line of diecast military products. Hobby Master, as it turns out, is made in Bangladesh, which isn’t subjected to the same abnormally high tariffs the Trump administration plans to impose upon China in early May. Unfortunately, this doesn’t mean that Bangladesh has dodged a bullet — far from it. According to the latest tariff plans, Bangladesh will be subject to a 37% tariff, making any products we import from the country exceedingly expensive.
According to our distributor, both the April and May shipments of Hobby Master products are not subject to the tariffs. However, both the June and July shipments will have a 10% tariff tacked on to their existing prices, meaning we will shortly have to adjust the retail prices for said items. But here’s where it gets dicey. Shipments that do not clear customs by July 8th will be subjected to the 37% tariff already discussed. As a result, our distributor plans to delay the arrival of both the August and September shipments until such time as the tariff picture comes into greater focus. In other words, if the current crisis is not averted and the tariffs do, in fact, get imposed it’s likely that we could see a pause in shipments from Hobby Master. Lines such as JC Wings, Panzerkampf and Dragon will almost certainly face the same dilemma since they are manufactured in the PRC, where the current proposed tariff has been pegged at 145%, making them far too expensive to even consider importing.
Needless to say, we’re hoping that the current trade war is settled to everyone’s satisfaction in the coming weeks to prevent this scenario from occurring. If it should happen, there’s a good bet that product already in stock will go up in price too, since demand will likely remain strong and supply won’t be able to keep pace. As it stands right now, we have ample supplies of each line but cannot predict our stock situation towards the later part of the year should we experience a run on the brands. The same holds true for virtually every segment of the toy industry, so what you see available on store shelves may be scare at a later date or see their prices jacked up well beyond the norm. Thus far its not clear if the proposed tariffs will have an adverse effect on new product announcements since product will still be manufactured for other regions around the world but perhaps in lesser quantities.
If the trade war does goes on for much longer, additional problems could creep into the retail equation that would almost certainly affect the retail sector. For instance, right about now is when most Asian manufacturers are beginning to produce toys and other related products for the upcoming holiday season. If these manufacturers are forced to wait and delay their manufacture, a situation could occur where our US ports are clogged with an abundance of late shipments, a scenario very reminiscent of what occurred during COVID. So even if the green light is issued to make and ship holiday-related products, it isn’t certain if they’ll make it in time to be of much value. Food for thought in today’s economic climate where events seem to be changing on an almost daily basis.