The global toy industry is undergoing a seismic shift as leading brands like Mattel and Hasbro overhaul their manufacturing strategies in response to U.S. tariffs and evolving trade policies. Here’s a deep dive into how these industry giants are diversifying their supply chains, which countries are emerging as new production hubs, and what these changes mean for the future of toys.

The China Shift: Why Tariffs Sparked a Supply Chain Revolution

For decades, China has been the world’s toy factory, accounting for about 80% of toys sold in the U.S. However, the imposition of steep tariffs—up to 145% on some imports—has forced companies to rethink their reliance on Chinese manufacturing. Mattel and Hasbro, the two largest U.S. toy companies, are leading this transformation.

Mattel’s Diversification Playbook

China’s Shrinking Share
In 2025, less than 40% of Mattel’s global toy production comes from China, a sharp drop from previous years. The company aims to reduce this to under 25% by 2027 for global production, and for U.S. sales, to below 10% by 2027.

Mexico Takes Center Stage
Mexico has become Mattel’s largest manufacturing hub, following a $47 million investment in its Nuevo León facility. This plant produces top sellers like Barbie Dream House and Fisher-Price Power Wheels, employing over 3,500 people.

Other Key Hubs
Malaysia now leads in Hot Wheels production, while Indonesia and Thailand also play significant roles. Mattel’s supply chain now spans at least seven countries, with India emerging as a new site for dual-sourcing products such as UNO cards.

No Single Point of Failure
By 2027, Mattel projects that no single country will account for more than 25% of its global production, minimizing the risk of future trade disruptions.

Hasbro’s Global Strategy

Rapid Diversification
Hasbro is shifting hundreds of product lines to new locations, including the U.S., Turkey, Japan, India, Vietnam, and Indonesia. Its goal is to have at least 40% of its global materials sourced outside China by the end of 2026—a target it may reach sooner.

U.S. and Global Footprint
Hasbro uses third-party factories in several U.S. states for printing and assembly and operates in 35 countries worldwide, including Brazil, Belgium, Ireland, and Japan.

The Impact: Costs, Prices, and Consumer Choice

Tariff-Driven Costs
Mattel expects tariffs to add $270 million to its costs in 2025, while Hasbro could face up to $300 million. Both companies are raising prices on some products, though Mattel is striving to keep 40–50% of its toys priced at $20 or less.

Industry-Wide Ripple Effects
Other manufacturers are also moving production out of China, but Mattel and Hasbro are ahead of the curve. Smaller companies are struggling, with 81% delaying orders and 64% canceling them due to cost pressures.

What’s Next for the Toy Industry?

Mattel and Hasbro’s aggressive supply chain diversification is setting a new standard for the toy industry. Their strategies are expected to make them more resilient to future trade shocks, give them greater flexibility in pricing and product availability, and ultimately strengthen their positions as global leaders in play.

In summary, the era of China-dominated toy manufacturing is waning. As Mattel and Hasbro reshape their global supply chains, the industry is entering a new phase—one defined by geographic diversity, operational agility, and a renewed focus on delivering value to consumers despite economic headwinds.

Writer's Bio: Driven by a fascination with how young people learn, grow, and connect, Laura N. Larsson has spent years researching the role of play and social media in child and adolescent development. Since 2012, she has combined her ecommerce background with in-depth interviews of children and teenagers, producing insightful articles that explore the evolving interplay between play, communication, and online interaction. Read more articles by this author