By Ally Marotti
Earlier this year, as President Donald Trump started his second term and began talking tough on tariffs, Timeless Toys in Lincoln Square decided to make a bet. The 30-year-old toy shop bought a year’s worth of inventory.
Shopkeeper Scot Friedland tapped into a line of credit to buy $700,000 in toys and games, and hired two extra employees to help manage the torrent of packages. The stock accumulated quickly in the toy shop’s basement. Friedland and his manager used their own garages and basements to store the excess.
Friedland’s goal was to buy as much inventory at pre-tariff prices as possible, attracting customers with lower prices and in-demand stock. So far, the gamble has paid off. Timeless Toy’s sales are up about 18.4% year over year.
“We got ahead of the game and we’re going to ensure we are fully stocked for the holiday season when other stores may not be,” Friedland said. “We have enough to get us basically through the end of Christmas and maybe the first month or two of 2026.”
Businesses across industries have been stockpiling product over the past few months to get ahead of tariffs. The move turned out to be particularly prescient for members of the toy industry. Seventy-seven percent of toys imported into the U.S. are from China, according to the Toy Association, the U.S. industry trade group. The Trump administration placed a 145% tariff on Chinese goods in April. That levy was in place more than a month before being lowered to 30%.
During that time, toy production essentially stopped, said Toy Association CEO Greg Ahearn. It was a critical time for the $42 billion industry — the toys sold during the holiday season are produced in the spring and summer.
As a result, low toy inventories are expected, particularly during the fourth quarter.
Friedland hopes his stock will last through the holiday season and beyond. One-third of Timeless Toys’ sales occur between Thanksgiving and Christmas. So far, marketing has helped bolster sales — the shop has been advertising its rich inventory and pre-tariff pricing.
“Because we bought so much product, we always have what people are looking for,” he said. “We’re never out of stock.”
However, the market has yet to feel the full impact of tariffs, said Brian Higgins, advisory partner for industrial manufacturing at professional services firm KPMG U.S.
Eighty-three percent of companies expect to raise prices in the next six months, according to a survey KPMG released earlier this month. Fifty-seven percent already reported declining gross margins due to tariffs. The pre-tariff inventory that companies stocked up on will only last so long.
“A lot of our clients, they’re selling through those pre-tariff inventories,” Higgins said. “For many companies, those front-loading benefits are a little fleeting.”
Cutting costs
Companies are also cutting costs, hoping to shelter their profit margins from further damage. Favored methods include predictive analytics and data-driven automation, he said.
“The common thread throughout is, ‘I’m battening down the hatches, I am reducing my overall expenditure in this environment, and I’m favoring AI as a vehicle to help me get there,’” he said.
They’re also stalling on capital expenditures and shifting their supply chains where possible, Higgins said. Many have not reduced their headcounts significantly, at least not yet.
The toy industry, though, is starting to.
Most U.S. toy companies are not large enough to weather the 30% tariff still in place on Chinese goods, said the Toy Association’s Ahearn. They lack access to extra capital and the leverage needed to effectively negotiate with suppliers. Sixty percent of toy companies the Toy Association surveyed recently said they expect layoffs in the next 60 days. Hasbro, the maker of Play-Doh, Monopoly and Nerf, in June announced a 3% reduction in its global workforce and attributed it to tariffs.
Bankruptcies ahead
Many retailers are being conservative with the quantities of toys they stock, unsure of how much consumers will want to spend on toys later this year. If the 30% tariff holds, Ahearn is expecting toy maker bankruptcies will follow.
Reshoring is a difficult prospect for the toy industry, Ahearn said. One animatronic plush toy could contain hundreds of parts — like motors, screws, springs, eyes, fur, etc. — that are all made at various factories, then assembled and packaged at another factory.
“Nothing like that exists in the U.S.,” he said.
Chicago-area toy makers are fighting the tariffs, too. Two Vernon Hills-based educational toy companies sued over them earlier this year. Learning Resources and hand2mind said in a court filing they paid more than $1 million China-related tariffs as of late April and customers canceled $1 million in orders. The companies said they’d need to raise prices by as much as 70% to offset tariff costs.
The companies won a preliminary injunction in late May that blocked the tariff policy as it applied to them and in June asked the Supreme Court to take up the case — though the high court rejected the Vernon Hills plaintiffs’ request to fast-track the matter.
At Timeless Toys, Friedland knows eventual price increases might be needed. He wants to delay them as long as possible. In the meantime, he plans to keep investing in marketing, growing his customer base to help juice sales.
“We are trying everything we can to be creative and get toys into the hands of our customers for a reasonable price,” he said. “Are those prices eventually going to have to increase if this continues? Sure. But we are going to go as long as we can without doing that.”