Speaker 1: This holiday season, families around the US are grappling with
Speaker 1: stubborn inflation and higher prices on virtually everything, including holiday gifts.
Speaker 1: President Trump's tariff policies have hit a broad range of industries,
Speaker 1: including toymakers. But earlier this year, one Chicago based toymaker
Speaker 1: with manufacturers in China decided to hit back with a lawsuit,
Speaker 1: and that case has found its way to the Supreme Court.
Speaker 1: Arguments in the case started on November fifth, and the
Speaker 1: Supreme Court's decision, when it comes down, could support or
Speaker 1: upend a key piece of the Trump Administration's legal justification
Speaker 1: for many of the tariffs. In the meantime, the Big
Speaker 1: Take Asia team has been tracking this story closely. We've
Speaker 1: reported out how the tariffs have impacted learning resources on
Speaker 1: the ground in Illinois. Wears headquartered in China, were produced
Speaker 1: toys for decades in Vietnam, were setting up a new
Speaker 1: manufacturing hub, and back to the US to small town
Speaker 1: Indiana to meet a family that can't afford to buy
Speaker 1: from this American toy company. Over the next few days,
Speaker 1: we'll bring you our reporting on this high stakes lawsuit,
Speaker 1: the company's battle to hedge tariff risks, and consumer frustration
Speaker 1: with rising prices.
Speaker 2: Bloomberg Audio Studios, podcasts, radio news.
Speaker 1: On a summer morning, a group of US Americans, Chinese,
Speaker 1: and Vietnamese are packed in a van. We're moving fast
Speaker 1: on a brand new highway that slices through Vietnam's Red
Speaker 1: River Delta. We're on our way to a toy factory,
Speaker 1: but just a few hundred yards away from the factory gate,
Speaker 1: we've come to a dead halt stem meet by an
Speaker 1: unexpected obstacle. Huge puddles.
Speaker 2: Apparently didn't identify the that's.
Speaker 1: The road leading to the factory gate is pocked marked
Speaker 1: with water filled potholes as big as truck tires. The
Speaker 1: only option is to get out and walk the last
Speaker 1: hundred yards.
Speaker 3: Okay, just this theory.
Speaker 1: It's barely nine am and it's already ninety degrees. My
Speaker 1: travel companion is ready to face the heat.
Speaker 4: It's hard to dress for these factory tours. I've now
Speaker 4: just basically green and a tire of a t shirt
Speaker 4: and some sort of very light white pants.
Speaker 1: I'm here with Alana Woldenberg Ruffman, vice president of marketing
Speaker 1: and product development for Learning Resources, a family run toy
Speaker 1: company just outside of Chicago. She's a mechanical engineer by
Speaker 1: training and helps run the family business alongside her dad,
Speaker 1: CEO Rick Woldenberg, and her two brothers.
Speaker 5: You know, some of my earliest memories with toy as
Speaker 5: would be like the Learning Resources cash register, or like
Speaker 5: the Pretend phone, which is a little dated at this point.
Speaker 5: You need the Pretend iPhone.
Speaker 1: The company traces its roots back more than a century
Speaker 1: ago to Lana's great grandfather. These days, if you have
Speaker 1: young kids, there's a chance you know their products. Botley
Speaker 1: the coding robot, and Pretend cash registers are hit with consumers.
Speaker 6: Hey do you see money? Yes, this is the pretendent plane,
Speaker 6: Learning Resources cash registered.
Speaker 1: Most of these toys are made in China and sold
Speaker 1: through major retailers like Target and Walmart. For years, it
Speaker 1: was a winning formula. Efficient Chinese factories produced low cost
Speaker 1: goods and American consumers benefited with affordable prices. But President
Speaker 1: Donald Trump's returned to the White House, an escalation of
Speaker 1: the trade war that he began in his first term
Speaker 1: has upended that formula. On April second, Trump announced the
Speaker 1: steepest American tariffs in more than a century, with a
Speaker 1: ten percent minimum tariff and even higher duties on some
Speaker 1: sixty nations, starting with China.
Speaker 7: So if you look at that China first row, China
Speaker 7: sixty seven percent, that's tariffs charged to the USA, including
Speaker 7: currency manipulation and trade barriers.
Speaker 1: For Learning Resources, this was a gut punch. The company
Speaker 1: had already started shifting production out of China during Trump's
Speaker 1: first term, but at the beginning of the year, about
Speaker 1: sixty percent of its toys were still made there. Here's
Speaker 1: Alana at one hundred and forty five percent.
Speaker 8: It's a van on our products. People didn't know what
Speaker 8: was going to happen to our business.
Speaker 1: Within weeks, Learning Resources took the Trump administration to court
Speaker 1: and won. A district judge in Washington, d C. Ruled
Speaker 1: the presidences to were illegal, but the levee stayed in
Speaker 1: place as Trump appealed. Now the case is headed to
Speaker 1: the Supreme Court, with arguments set for next week.
Speaker 8: We're the only private company that brought our own lawsuit.
Speaker 8: We were kind of faced with the decision of die
Speaker 8: or do something.
Speaker 1: While battling it out in court, the company also began
Speaker 1: rebuilding the manufacturing network it has spent decades developing.
Speaker 8: We don't know what the tariff rates are going to
Speaker 8: be at any given time on any given day, and
Speaker 8: so we're proactively out here trying to diversifire our supply
Speaker 8: chain so that we are able to ride the waves.
Speaker 8: At the end of the day, We're just we're betting
Speaker 8: it is highly likely that some products that we move,
Speaker 8: we will have to move again.
Speaker 1: We're following along as Learning Resources is forced to shift
Speaker 1: its supply chain to Vietnam, and as the company tries
Speaker 1: to move forward, it's also confronting a hard truth. China's
Speaker 1: manufacturing infrastructure, built over decades isn't some thing you can
Speaker 1: walk away from overnight.
Speaker 8: Because China has been manufacturing hub for so long, it
Speaker 8: developed a lot of expertise. That same infrastructure doesn't exist
Speaker 8: anywhere else in the world today.
Speaker 1: This is the big take Asia from Bloomberg News. I'm
Speaker 1: Wanha today on the show. You can move manufacturing out
Speaker 1: of China, but can you really take China out of manufacturing?
Speaker 1: We hit the road with an American toymaker caught in
Speaker 1: the crosshairs of Trump's shifting trade policy and uncover the
Speaker 1: hidden costs of trying to stay one step ahead. Before
Speaker 1: this trip, I hadn't been back to northern Vietnam since
Speaker 1: the pandemic. I was born in Saigon when it was
Speaker 1: still the capital of South Vietnam, a country divided by war.
Speaker 1: After the US withdrew in defeat in nineteen seventy five,
Speaker 1: the country was unified under Communist rule, but it was
Speaker 1: left deeply impoverished. Families like mine, who had fought on
Speaker 1: the losing side faced bleak futures. Here's my dad recounting
Speaker 1: the fears that gripped him after the war ended.
Speaker 3: I feel danger. I don't know when they kept me
Speaker 3: put to the yale, and I don't know what it
Speaker 3: can do because I am a soldier.
Speaker 1: My dad fought for South Vietnam against the Communist forces.
Speaker 1: After the war, soldiers like him were sent to re
Speaker 1: education camps and their families were branded as traders. They
Speaker 1: were denied access to jobs, higher education, opportunities to improve
Speaker 1: their lives.
Speaker 3: Then I don't see a future for me. Then how
Speaker 3: about you, guy? You know no future. That's the reason
Speaker 3: we tried to escape. You know, weder to go leave Vietnam,
Speaker 3: we go.
Speaker 1: We fled as boat refugees. When I was a child,
Speaker 1: and we settled in California. I still remember my parents
Speaker 1: reading letters from relatives back home. My mom reduced to
Speaker 1: tears by the accounts of failed harvests, the lack of medicine,
Speaker 1: and please for financial help. In the late eighties, Vietnam
Speaker 1: began economic reforms, but it wasn't until nineteen ninety four,
Speaker 1: when the US lifted a decades long trade embargo, that
Speaker 1: the country truly opened to global trade.
Speaker 7: A year after Vietnam and the US signed a historic
Speaker 7: trade pact, sales at this garment factory in Hanoi have
Speaker 7: hit record levels.
Speaker 1: Orders in twenty ten, more than thirty years after my
Speaker 1: family left, I was hired as Bloomberg's Vietnam Beer chief
Speaker 1: in Hanoi, where we chronicled the country's growing manufacturing prowess.
Speaker 1: I followed Vietnam's rise since then, but nothing prepared me
Speaker 1: for the pace of change I'm seeing now while look
Speaker 1: all of us is how much construction. We're heading to
Speaker 1: a factory called dum Fun. It's tucked inside an industrial
Speaker 1: park in the town of Fuli, about an hour's drive
Speaker 1: south of Hanoi and roughly one hundred and thirty miles
Speaker 1: from the Chinese border. The industrial zone was approved in
Speaker 1: twenty seventeen, just months after President Trump first took office
Speaker 1: and began threatening China with trade actions. Within two years,
Speaker 1: rice fields were transformed into a sprawling complex of factories
Speaker 1: dum Fun stretching nearly two football fields. Long was started
Speaker 1: by a Chinese entrepreneur who ran a manufacturing plant in
Speaker 1: eastern China for fifteen years.
Speaker 9: They are tiny, like got a big palm in the front.
Speaker 1: That's Jimmy Lee, a manager from Longshore. The company makes
Speaker 1: toys in China and is a longtime partner of Learning
Speaker 1: Resources in Vietnam. They're helping to connect the America Company
Speaker 1: to factories like this one, with Jimmy often on the
Speaker 1: ground to oversee projects. He's talking about the pond at
Speaker 1: the factory gate. In Chinese culture, having water near the
Speaker 1: entrance is seen as a sign of good luck, and
Speaker 1: if you add a north facing gate even better.
Speaker 9: It seems like they had a yeah, one hundred percent
Speaker 9: north door with a pond in the front.
Speaker 6: You know, it's a typical set up.
Speaker 1: Elana and her team are visiting Dumbfung for the first time.
Speaker 1: It's one of a dozen factories they'll visit this week
Speaker 1: to assess production and find ways to control costs that
Speaker 1: are already rising. We begin our tour in the warehouse,
Speaker 1: where bags of raw materials, including plastic resin, are stacked
Speaker 1: five feet high.
Speaker 10: So one of the things that we've been working through
Speaker 10: with our factories is literally where they get the raw materials.
Speaker 10: That's a big element of controlling the cost. So, like
Speaker 10: this is ABS.
Speaker 1: Alana leans over sack of glossy plastic pellets, scanning the labels.
Speaker 1: She's inspecting ABS, a common plastic used to make legel
Speaker 1: bricks as well as learning resources toys.
Speaker 10: Yeah, so do you know if all the ABS comes
Speaker 10: from China for those factory or are they getting it
Speaker 10: from other countries too?
Speaker 9: I think the import out of China also, but plain
Speaker 9: sauce to be in China.
Speaker 4: Yeah, and ABS is a particularly challenging type of plant.
Speaker 1: It turns out only two types of plastic the factory
Speaker 1: needs can be sourced locally in Vietnam, and we soon
Speaker 1: realized the trucks pulling into the factory earlier were loaded
Speaker 1: with raw materials from China, making routine deliveries of imported parts.
Speaker 1: We passed the warehouse and step onto the factory floor,
Speaker 1: stopping in front of an injection molding machine.
Speaker 4: So there's piping in here that's feeding in the plastic
Speaker 4: pellets that we just saw, and it's going to melt
Speaker 4: them into a shape of the steel mold.
Speaker 1: The plant is currently making more than fifty learning resources toys,
Speaker 1: with more come in. One of them is Campfire chat Mellows,
Speaker 1: a product that's being made in Vietnam for the first time.
Speaker 1: It's a storytelling toy designed to spark conversations. Imagine a
Speaker 1: cozy campfire that flickers with led light. There are soft,
Speaker 1: squishy marshmallows called chat mellows, each printed with a unique emoji,
Speaker 1: a magic wand a storm a jigsaw puzzle.
Speaker 5: Once upon time, there is one little boy who is
Speaker 5: playing jigsaw puzzles.
Speaker 1: And then these images are story starters. Kids slide them
Speaker 1: onto sticks and pretend to roast them over the campfire
Speaker 1: while telling stories to each other. At the injection molding machine,
Speaker 1: a robotic steal arm grabs onto squishy marshmallows that have
Speaker 1: emerged from the mold. Elana says that kind of automation
Speaker 1: is actually missing in many of the factories she's visited
Speaker 1: this week.
Speaker 4: The automation is a period, so like you look around
Speaker 4: and there's a lot of people, is not as many
Speaker 4: machines covering the same thing that a person might do,
Speaker 4: and so that's gonna bring the cost up a little bit.
Speaker 1: In Vietnam, factories still rely heavily on manual labor because
Speaker 1: advanced machinery like this isn't easy to come by. It's
Speaker 1: expensive and often needs to be imported, likely from China,
Speaker 1: which dominates much of the market for toy manufacturing. And
Speaker 1: even in factories that do have automation like this one,
Speaker 1: Alanas noticed something else that affects productivity.
Speaker 10: So whereas in China, am I in tape one worker
Speaker 10: to worker machine, in Vietnam it will take two workers
Speaker 10: because they don't understand they're not as familiar with the
Speaker 10: machine for it, so that'll take six to twelve months
Speaker 10: for them to really learn it and to get it
Speaker 10: to the same level of automation that exists already in China.
Speaker 1: You know you're trying to squeeze, Jimmy says. This factory
Speaker 1: has about a third more workers than a similar plant
Speaker 1: in China, and unlike Chinese laborers who've worked years or
Speaker 1: even decades at facilities like this, many of these workers
Speaker 1: aren't new to assembly work. Some of the staff we
Speaker 1: spoke to came off farms and are relatively new to
Speaker 1: assembly lines. That lack of experience, combined with lower automation,
Speaker 1: hits productivity. Alana says some vendors report making four thousand
Speaker 1: units a day in China, but only twenty five hundred
Speaker 1: in Vietnam. We follow the Chatmello's productions through the paint department,
Speaker 1: where workers manually spray red and orange flames on the toy,
Speaker 1: then onto the assembly floor, where hundreds of workers in
Speaker 1: blue company issued polo shirts and caps sit at long
Speaker 1: metal tables. Workers on the line split open the plastic logs,
Speaker 1: insert screws, install battery contacts, and solder the electronics board.
Speaker 1: On the assembly line, a Chinese manager is showing a
Speaker 1: worker how to fit apart together, pointing out where to
Speaker 1: pay extra attention. His instructions in and are translated into
Speaker 1: Vietnamese and the workers questions are relaid back Yo. This
Speaker 1: factory has relocated about twenty engineers and managers from China
Speaker 1: to Vietnam, and that's to help bridge the gap in
Speaker 1: experience and technical know how. It's a common practice for
Speaker 1: factories here. Jimmy says, Chinese workers have developed specialized skills
Speaker 1: over decades that are difficult to quickly replicate elsewhere.
Speaker 9: Every single Chinese factory moving from here, they will rely
Speaker 9: on their own team to split up. I mean the
Speaker 9: core member of Platino still Chinese. He posed that is
Speaker 9: with experience.
Speaker 1: The tariffs also bring another risk Learning Resources has yet
Speaker 1: to calculate. To explain, Alana picks up the chat Mellow
Speaker 1: toy the interior.
Speaker 4: These chips are made introduced in China and then imported here.
Speaker 4: The soldering is done locally. This product will need batteries.
Speaker 4: Those will be imported. You cannot five batteries lobally in Vietnam.
Speaker 4: The metal is imported, so all.
Speaker 1: These different That's a big contrast to China, where more
Speaker 1: than ten thousand companies form an extensive sourcing network for
Speaker 1: the toy industry. Vietnam's toy suppliers are in the hundreds,
Speaker 1: a fraction of what China has.
Speaker 8: So within a city center or geographic area in China,
Speaker 8: you can find a plastic splier, a print supplier, a
Speaker 8: foam supplier, a wood supplier, and so on. So all
Speaker 8: that is available locally. That same infrastructure doesn't exist anywhere
Speaker 8: else in the world today.
Speaker 1: All these imported materials could spell trouble for businesses. On
Speaker 1: top of the twenty percent terrace in Vietnam, Trump has
Speaker 1: also slapped a forty percent transshipment rate on goods that
Speaker 1: originate in China but are then exported from Vietnam. That
Speaker 1: extra levy is designed to crack down on companies that
Speaker 1: reroute made in China products through Vietnam, adding little or
Speaker 1: sometimes no additional manufacturing. So far, the administration hasn't offered
Speaker 1: any guidance on how these higher duties will actually be enforced.
Speaker 4: So the rules on trendshipment haven't been fully defined yet.
Speaker 4: So these are things that we need to guess on
Speaker 4: and whether componentry which is brought in from other countries
Speaker 4: might impact the terraffraight.
Speaker 1: Elana says. All these factors add up more workers, less automation,
Speaker 1: imported components, Chinese engineers. They make manufacturing in Vietnam ten
Speaker 1: to fifteen percent more expensive than in China. Elana says,
Speaker 1: the entire process scouting factories, moving molds, prototyping adds up
Speaker 1: to millions of dollars.
Speaker 8: They're not recoverable. There's a lot of costs here that
Speaker 8: aren't recoverable.
Speaker 5: Orders that we've lost, like those will never come back,
Speaker 5: Costs that are being passed to customer, like all these
Speaker 5: things are.
Speaker 1: Irreparable.
Speaker 5: Heart And that's part of why we were motivated to
Speaker 5: bring the lawsuit, is because there's a lot of damage
Speaker 5: being done and there's a lot of small medium sized
Speaker 5: businesses who don't have the ability to stand up, and
Speaker 5: so we wanted to stand up on behalf of the
Speaker 5: thousands of companies like our store.
Speaker 8: Impactor Venus.
Speaker 1: After the break, what does the supply chain shift mean
Speaker 1: for workers on the factory floor, for families in nearby villages,
Speaker 1: and for American consumers back home. The town of Fully,
Speaker 1: about forty miles from Vietnam's capital city of hanois in
Speaker 1: the Red River Delta. It's in a valley surrounded by lush, green,
Speaker 1: karst limestone mountains, a post guard landscape until you get
Speaker 1: close and see the peaks being quarried to build roads
Speaker 1: and industrial parks. It's a small, off the beaten path
Speaker 1: town that historically attracted mostly locals, but during our time there,
Speaker 1: we bumped into Chinese visitors and heard Mandarin at breakfast
Speaker 1: and at roadside cafes. Most hotels were nearly fooled because
Speaker 1: most rooms were now being used to house Chinese workers,
Speaker 1: a trend that began in the past year. My own
Speaker 1: family left Vietnam during a time of high tensions with China,
Speaker 1: with the two countries engaged in a border war in
Speaker 1: nineteen seventy nine. Then Vietnam harassed ethnic Chinese and questioned
Speaker 1: their loyalty. It forcibly expelled families with Chinese roots who
Speaker 1: lived along the northern border regions. My father's side of
Speaker 1: the family had immigrated from China to southern Vietnam in
Speaker 1: the early nineties hundreds, and those discriminatory policies after the
Speaker 1: war pushed out families like ours.
Speaker 3: And we're buy the old bow and we modify the boat, running,
Speaker 3: you know, on the ocean.
Speaker 1: In the summer of nineteen seventy nine, my father and
Speaker 1: his brothers retrofitted a river boat to make it seaworthy,
Speaker 1: and my grandfather navigated our way through the South China Sea.
Speaker 1: All three hundred of the people who fled on our
Speaker 1: overloaded boat were ethnic Chinese.
Speaker 3: And we take a chance. Fifty to fifty, you know,
Speaker 3: fifty diet fifty, you know, a lie, No, fifty to fifty.
Speaker 1: Through the years My dad has talked about that difficult
Speaker 1: decision to risk all of our lives on the sea
Speaker 1: because he and my grandfather couldn't see a way for
Speaker 1: his children to have hopeful futures in our homeland. Because
Speaker 1: of our ancestry, we brave storms and pirate attacks to
Speaker 1: become refugees in far away countries. Countless other didn't survive
Speaker 1: the journey. In Vietnam, that dark chapter is all but forgotten.
Speaker 1: The relations between China and Vietnam still have points of contention.
Speaker 1: They're entwined economically, Chinese investors are embraced more than ever,
Speaker 1: and Chinese capital funds nearly thirty percent of all new projects.
Speaker 1: Just a few hundred yards from the Dumb Fund plant,
Speaker 1: we stop at a roadside eatery right across from the
Speaker 1: site of new factories under construction. Windy Twin is seventy
Speaker 1: eight years old. She's just finished lunch and is chatting
Speaker 1: with her neighbor.
Speaker 6: This is my hometown. These will rice views all the
Speaker 6: way to the river.
Speaker 1: Long before the factories arrived. Generations of families here, including
Speaker 1: the Winds, worked the land rice wheat tsava in Vietnam.
Speaker 1: Land is sacred after babies are born, their umbilical courts
Speaker 1: are buried in the fields to ask the land to
Speaker 1: protect them, and when they die, they're often buried in
Speaker 1: the same rice fields where they toiled.
Speaker 6: All of this area used to be in my family's fields,
Speaker 6: all the way out to there. We are farmers. What
Speaker 6: do we do without our fields?
Speaker 1: In twenty thirteen, the government requisitioned the land to make
Speaker 1: way for industrial development. Duyen and her neighbors say they
Speaker 1: were forced to sell their ancestral farms and compensated about
Speaker 1: ten thousand dollars, a price they deemed to both.
Speaker 6: They reclaimed the land, so we had to sell. No
Speaker 6: one wanted to sell, but we had no choice. You
Speaker 6: couldn't refuse.
Speaker 3: Come what is our lack?
Speaker 1: In the end, Duyn's family bought a small plot across
Speaker 1: the street from the construction site. They paid nearly seven
Speaker 1: times the government's compensation price per square meter. They built
Speaker 1: a house and opened a small cafe serving construction workers,
Speaker 1: but she worries it won't last that workers will eat
Speaker 1: at the factory canteens once construction ends. During our visit,
Speaker 1: the air hung heavy with dust. Duyn and her neighbors
Speaker 1: worry about pollution. Both in the air and from the factories.
Speaker 1: Given the breakneck pace of development, still she acknowledges the
Speaker 1: factories have open doors. Her daughter in law, once a farmer,
Speaker 1: now earns nearly three hundred dollars a month at the
Speaker 1: Dumbfun factory making toys for learning resources. Her husband weilds
Speaker 1: at construction sites. Together, they've saved enough to send their son,
Speaker 1: Lunn's grandson, to study automotive engineering in South Korea. It's
Speaker 1: a future, she says, made possible by factory work. That
Speaker 1: hope for a better future also lies a few miles
Speaker 1: away at the Hannam Vocational School. Here, students as young
Speaker 1: as fifteen are training to become machine operators and engineers.
Speaker 1: The school says nearly all graduates land factory jobs. Global
Speaker 1: companies like LG, Hyundai and Samsung send trainers and donate.
Speaker 9: Equipment, And what thought, I have a movie through you.
Speaker 1: Sixteen year old Duncom is a returning student at the school.
Speaker 1: Gum says he loves tinkering with electronics, and he's eager
Speaker 1: to find a factory.
Speaker 8: Am I Garden.
Speaker 9: Factories have a lot of equipment and machines, so they
Speaker 9: need people to fix and maintain them.
Speaker 3: That's why I chose to study industrial electricity to.
Speaker 2: Fix ma.
Speaker 1: GM says a university education might not lead to a
Speaker 1: career right away, but he's certain he can have his
Speaker 1: choice of factory jobs. My conversation with his confident teenager,
Speaker 1: upbeat about his future, left an impression on me. After
Speaker 1: a week in Vietnam, it's clear that optimism runs deep,
Speaker 1: centered around the factories and foreign investors pouring capital into
Speaker 1: the region. The country's leaders are highly attuned to the
Speaker 1: shifting geopolitical wins and are bent on maintaining growth. The US,
Speaker 1: once a wartime enemy turned trading partner, now seems like
Speaker 1: a fickle friend with its high tariffs, so Vietnam's counting
Speaker 1: on foreign investors to help ride it out. Before heading home,
Speaker 1: I asked Alana for her final thoughts after a week
Speaker 1: of crisscrossing the country and visiting a dozen factories.
Speaker 8: Vietnam certainly has potential. The products that we saw made
Speaker 8: here are very high quality. They're certainly expertise here, and
Speaker 8: it's growing and changing rapidly. I think some of the
Speaker 8: hang ups though, or that there's not as much capacity,
Speaker 8: so there's just physically not as much manufacturing space here
Speaker 8: as there is in China. And then additionally, you can't
Speaker 8: get a lot of the raw materials locally, and so
Speaker 8: that is driving cost.
Speaker 1: For now, Learning Resources is placing its bets on Vietnam,
Speaker 1: but tariffs are adding pressure. The company has already raised
Speaker 1: prices of its toys by an average of six percent
Speaker 1: the bare minimum to cover the costs, and Alana says
Speaker 1: more hikes are on the way if Trump imposes additional tariffs.
Speaker 1: But the biggest cost isn't on any invoice. Because of
Speaker 1: the tariffs, Learning Resources had to cut its product development
Speaker 1: budget in half. That meant shelving over one hundred new products,
Speaker 1: including an entire line of educational toys for classrooms.
Speaker 8: That whole range had to go on hold because it
Speaker 8: was too big and too complex.
Speaker 5: It was going to take too many resources, and we
Speaker 5: just couldn't justify it given all the other things that
Speaker 5: we had to do.
Speaker 8: So like that's one that just personally for me, that
Speaker 8: makes me very sad because it's a product that teachers
Speaker 8: have been asking us to do for years.
Speaker 1: Elana says consumers will pay for the tariffs twice in
Speaker 1: higher prices and in toys from the industry with a
Speaker 1: little less magic because instead of investing in innovation, toy
Speaker 1: makers are syncing their budgets into tariffs and supply chains.
Speaker 8: Theser costs that have led to us slashing budgets and
Speaker 8: pulling back on investments that we were going to make.
Speaker 8: We are hiring less people, We're coming out with fewer
Speaker 8: products for the consumers.
Speaker 11: This is just going to mean higher prices and less choice.
Speaker 1: This is the big take, Asia from Bloomberg News. I'm wanha.
Speaker 1: This is the first episode in an ongoing series on
Speaker 1: how one American toymaker is grappling with record high tariffs.
Speaker 1: Join us as the journey continues. If you like the episode,
Speaker 1: be sure to subscribe at Bloomberg dot com slash podcast, offer,
Speaker 1: leave a review, and even better, tell a friend it
Speaker 1: really makes a difference. Thanks for listening, See you next time.