If the global toy market were a grand stage, Yiwu would undoubtedly be its center. Recently, this hub delivered welcome news to toy exporters: US retail giants Walmart and Target, which had previously halted orders due to high tariffs, have notified some Yiwu-based suppliers to resume shipments.
The move signals a thaw in strained supply chain relations and raises hopes that American children may still receive Chinese-made toys in time for Christmas. However, it also poses a critical question: Who will bear the soaring tariff costs?
The Tariff Dilemma
Earlier, Walmart suspended shipments from Yiwu toy manufacturers after US "reciprocal tariffs" surged to 145%. While factories continued operations, the sharp decline in orders placed significant pressure on businesses. The partial resumption of orders by Walmart and Target marks a positive development, particularly as the additional tariff costs will now be shouldered by the US clients.
Why the Reversal?
Industry analysts point to multiple factors driving the retailers' decision:
1. Supply Chain Stability: The toy industry remains heavily reliant on Chinese manufacturing, especially during peak seasons like Christmas. Prolonged shortages could directly impact retailers' sales and market share, making tariff absorption a necessary compromise.
2. Failed Cost-Shifting: Retailers initially attempted to pass tariff costs to suppliers, but exorbitant rates severely squeezed profit margins. Further pressure risked supplier bankruptcies or market exits, prompting a shift toward shared burden.
3. Competitive Pressures: Low-price strategies remain central to Walmart and Target's market dominance. Passing tariffs to consumers would erode price advantages, potentially ceding ground to rivals. Absorbing costs internally helps maintain competitive pricing.
While challenges persist—including uncertainties around full supply restoration and future tariff policies—the resumption offers cautious optimism for Yiwu's toy industry. It also highlights how businesses navigate trade tensions through adaptive strategies.