The potential imposition of a 145% tariff on imports from China could result in significant financial repercussions for Hasbro, with estimates suggesting a hit of up to $300 million to the company’s profits.
On Thursday, the toy manufacturer reported earnings that exceeded expectations, yet the attention of investors and analysts remained firmly fixated on the trade conflict initiated by the Trump administration, which heavily impacts the largest producer in the toy sector.
Despite the turbulence, Hasbro affirmed its full-year financial outlook from the previous quarter, citing the unpredictability of the current tariff landscape.
“Our forecasts encompass a range of scenarios regarding tariffs from China, spanning from 50% to the full 145%, alongside a 10% tariff for the rest of the world,” explained Gina Goetter, Hasbro’s Chief Financial Officer and Chief Operating Officer, during the earnings call. “This could lead to a gross impact of anywhere between $100 million and $300 million for the enterprise by 2025, excluding any mitigation efforts.”
CEO Chris Cocks mentioned during the same call that while no company is immune to these challenges, Hasbro’s positioning remains strong. He credited the company’s steadiness to solid performances in their games and licensing divisions and strategic flexibility.
“Extended tariff conditions breed structural costs and increase market uncertainty,” he commented. He further remarked, “In the end, tariffs translate into elevated prices for consumers.”
Cocks also highlighted the risk of potential job losses as the company works to adjust to escalating costs and decreased shareholder profits.
Hasbro’s U.S. games segment is somewhat insulated due to a focus on digital products and domestic production, with many board games manufactured in Massachusetts. Meanwhile, the Wizards of the Coast unit, known for popular titles like Magic: The Gathering and Dungeons & Dragons, faces limited tariff exposure, with Cocks estimating it to be under $10 million thanks to manufacturing largely occurring in North Carolina, Texas, and Japan.
Conversely, Hasbro’s toy division grapples with higher vulnerability as a significant portion of its products are sourced from China. Cocks noted that the company is investigating potential options for relocating parts of its supply chain to other regions.
“However, some of this transition will incur additional costs,” he stated. “Producing board games domestically is considerably more expensive compared to manufacturing in China.”
He mentioned a potential shift of Play-Doh production from China to Turkey, whereby Turkish manufacturers would redirect shipments to the U.S., while Chinese factories would supplement the supply for the European market.
Certain products pose more complex challenges, especially those that contain electronic components, high-end design elements, and foam materials, Cocks indicated.
“China will remain a crucial manufacturing center for us worldwide, primarily due to the specialized capabilities it has developed over many years,” he added.
Goetter noted that the effects of manufacturing transitions are anticipated to manifest around 2026, contingent upon whether alternative countries possess the necessary infrastructure to produce specific items.
In response to tariff pressures, Hasbro is ramping up its $1 billion cost-saving initiative, although it acknowledges that price increases are inevitable.
Both Goetter and Cocks conveyed that Hasbro’s strategic plans possess a degree of flexibility and will adapt as tariff conditions evolve. The company remains optimistic for a “more predictable and favorable U.S. trade policy environment.”
“We are aiming to strike a balance between defensive and offensive strategies,” Goetter concluded.
