US-China Tariff Truce Lifts Toy Stocks: Economist Says 'Bloodbath' Avoided Before Key Shipping Season

Major toy stocks rallied Monday after the U.S. and China announced a temporary trade truce.

Both sides will cut the additional tariffs for the next three months —the U.S. will cut import duties on Chinese goods from 145% to 30%, and China will cut levies on American imports from 125% to 10%.

Barbie dolls and Hot Wheels cars maker Mattel's (MAT) shares rose 10.2%, their best intraday gains since February. Shares of Hasbro (HAS), known for Star Wars action figures, jumped 6.6%, while those of Jakks (JAKK) and Funko (FNKO) soared 15.4% and 46.4%, respectively.

Recently, these companies have been scrambling to shift their supply chains away from China, a key toy manufacturing region.

According to a CNBC report, Bank of America estimates that Mattel and Hasbro source about 40% of their U.S. products from China.

Last week, Mattel withdrew its annual forecast and said that U.S. trade tariffs would bump costs by hundreds of millions of dollars this year. Hasbro also estimated an approximately $300 million hit to its bottom line.

Bloomberg economist Anna Wong indicated that the trade truce will likely allow holiday goods, such as toys, electronics, and clothing, to be imported without high tariffs, helping retailers and consumers during the shopping season that falls around Christmas.

In a post on X, Wong said that the timing coincides with the peak "shipping season," typically in mid-year, and also means the U.S. economy is spared from a major labor market shock in May and June.

Mattel stock is now up 7.2% this year, and Hasbro stock is up 17.3%.

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