Mattel’s Global Supply Chain Shift: Adapting to Tariffs and Reducing Dependence on China
Mattel, a global leader in toy manufacturing, is strategically diversifying its production sources in response to the rising tariffs on Chinese imports, particularly the steep 145% U.S. tariff. The company, which once relied heavily on Chinese factories for its toys, is making significant moves to reduce its dependence on China and strengthen its global supply chain.
A Shrinking Share of China in Mattel's Global Production
As of 2025, less than 40% of Mattel’s global toy production comes from China, down from previous years. The company is aggressively working to decrease this figure further, aiming for less than 25% by 2027, with a goal of reducing its reliance on China to under 10% for U.S. sales by the same year. This shift reflects a broader trend in the toy industry, as manufacturers reassess their supply chains due to tariffs and the increasing costs associated with manufacturing in China.
Mexico’s Role as Mattel's Largest Manufacturing Hub
Mexico has emerged as Mattel's largest manufacturing hub, particularly after a substantial $47 million investment in a new facility in Nuevo León. This plant now produces some of Mattel’s best-selling products, including the Barbie Dream House, Fisher-Price Power Wheels, and MEGA Bloks. Over 3,500 employees are part of this operation, which reflects the company’s shift toward near-shoring its production to reduce shipping costs and avoid heavy tariffs.
Expanding Operations Beyond China
Mattel's diversification efforts have extended to other countries, with Malaysia taking a key role in Hot Wheels production, while Indonesia and Thailand contribute to various lines as well. As of now, Mattel sources toys from at least seven countries. By 2027, the company plans to ensure that no single country accounts for more than 25% of its global production, reducing the risk of overreliance on any one region.
Shifting Production Amid Tariffs
In response to the U.S. tariff on Chinese imports, Mattel has significantly ramped up its production diversification. In 2025 alone, the company is shifting 500 toy models from China to other countries, a notable increase from the 280 models moved in 2024. India has emerged as a new location for some of Mattel's production, with the company now dual-sourcing products like the popular UNO game from both China and India. This dual-sourcing approach provides more flexibility and reduces the potential risks tied to relying solely on one country.
The Industry-Wide Impact of Tariffs
Mattel's approach to mitigating the effects of tariffs is part of a broader industry trend. According to the Toy Association, around 80% of toys sold in the U.S. have historically been sourced from China. However, Mattel has been proactive in reducing its reliance on China compared to other manufacturers. In 2025, the company expects the tariffs to add $270 million to its costs. To offset these increased expenses, Mattel has begun raising prices on some of its products in the U.S., though it remains committed to keeping 40-50% of its toys priced at $20 or less, ensuring affordability for its consumers.
Other companies in the toy industry are also feeling the pressure of tariffs. Many are postponing or canceling orders, raising prices, or shifting their production to alternative locations. A recent survey by the Toy Association found that 81% of small toy businesses are delaying orders, and 64% are canceling them altogether due to the increased cost pressures. The toy sector, as a whole, is preparing for higher prices and potential shortages, particularly during the holiday season, as the disruptions caused by tariffs force companies to restructure their supply chains rapidly.
Looking Ahead: What Does This Mean for Consumers?
As Mattel and other toy manufacturers adapt their supply chains, the future of toy prices and availability will likely shift. While the impact of tariffs is still being felt, consumers can expect price hikes on some popular products as companies adjust to the changing landscape. However, Mattel’s strategy of diversifying its manufacturing locations and dual-sourcing will help it remain resilient in the face of these economic challenges, ensuring continued product availability and competitive pricing in a complex global market.
In summary, the era of China-dominated toy manufacturing is gradually coming to an end. Mattel’s strategic moves to diversify its production hubs and reduce its dependence on Chinese factories are setting a new standard in the toy industry, one that emphasizes resilience, flexibility, and cost-efficiency in an increasingly volatile trade environment.
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. 
