The Reuters article titled “This US-owned factory in China made toys for Walmart. Tariffs put it on life support” delves into the challenges faced by Huntar Company Inc., a U.S.-owned toy manufacturer operating in Guangdong, China. The company has been severely impacted by the imposition of a 145% tariff on Chinese imports by President Donald Trump.

Huntar, which supplies educational toys to major retailers like Walmart and Target, experienced a wave of order cancellations following the tariff announcement. In response, CEO Jason Cheung halted production, laid off a third of the factory’s 400 workers, and implemented wage reductions. The company is now exploring relocation to Vietnam, but faces significant logistical and financial challenges in doing so. Cheung estimates that the company has only a month before its funds are depleted.

This situation underscores the broader crisis among toy manufacturers, many of which are based in China and are now struggling amid the escalating U.S.-China trade war. Smaller U.S. toy companies are particularly vulnerable, with many fearing bankruptcy. While there have been indications of potential tariff reductions, rates above 50% remain unsustainable for businesses like Huntar. The scenario highlights the complexities of reshoring manufacturing and the unintended consequences of tariff policies intended to boost U.S. industry.

Source: Reuters