Toymakers, retailers brace for holiday shopping season disrupted by U.S. tariffs
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But President Donald Trump's vacillating trade policies, part of his effort to revive the nation's diminished manufacturing base and to reduce the U.S. deficit in exported goods, have complicated those end-of-year plans. Balsam Hill, which sells artificial trees and other decorations online, expects to publish fewer and thinner holiday catalogues because the featured products keep changing with the tariff — import tax — rates the president sets, postpones and revises.
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'The uncertainty has led us to spend all our time trying to rejigger what we're ordering, where we're bringing it in, when it's going to get here,' Mac Harman, CEO of Balsam Hill parent company Balsam Brands, said. 'We don't know which items we're going to have to put in the catalogue or not.'
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Months of confusion over which foreign countries' products may become more expensive to import has left a question mark over the holiday shopping season. U.S. retailers often begin planning for the winter holidays in January and typically finalize the bulk of their orders by the end of June. The seesawing tariffs already have factored into their calculations.
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The consequences for consumers? Stores may not have the specific gift items customers want come November and December. Some retail suppliers and buyers scaled back their holiday lines rather than risking a hefty tax bill or expensive imports going unsold. Businesses still are setting prices but say shoppers can expect many things to cost more, though by how much depends partly on whether Trump's latest round of 'reciprocal' tariffs kicks in next month.
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The lack of clarity has been especially disruptive for the U.S. toy industry, which sources nearly 80 per cent of its products from China. American toy makers usually ramp up production in April, a process delayed until late May this year after the president put a 145 per cent tariff on Chinese goods, according to Greg Ahearn, president and CEO of the Toy Association, an industry trade group.
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The U.S. tariff rate may have dropped significantly from its spring high — a truce in the U.S.-China trade war is set to expire on Aug. 12 — but continues to shape the forthcoming holiday period. Manufacturing activity is way down from a year ago for small- and medium-sized U.S. toy companies, Ahearn said.
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The late start to factory work in China means holiday toys are only now arriving at U.S. warehouses, industry experts said. A big unknown is whether tariffs will keep stores from replenishing supplies of any breakout hit toys that emerge in September, said James Zahn, editor-in-chief of the trade publication Toy Book.
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Winnipeg Free Press
a minute ago
- Winnipeg Free Press
As Trump's tariff deadline looms, a clothing factory in the tiny African nation of Lesotho goes dark
MASERU, Lesotho (AP) — The deafening roar of hundreds of sewing machines has gone silent. Spools of thread in every color are covered in dust. The warehouse is dark and empty. In the tiny African nation of Lesotho, clothing manufacturer Tzicc's business has dried up in the face of tariffs imposed by U.S. President Donald Trump's administration. A few months ago, work was steady. The factory's 1,300 employees has made and exported sportswear to American stores, including JCPenney, Walmart and Costco. But when Trump announced sweeping new tariffs on nearly all U.S. trading partners in April, Lesotho found itself topping the list, with a rate of 50% — higher even than that of China, where the economy is 8,000 times larger. Officials here and economic experts said they were baffled. Since then, Trump backed off — temporarily. During a monthslong pause for trade talks, the U.S. has charged a baseline 10% tariff and announced new rates for dozens of countries starting Friday. Lesotho's rate will be set at Trump's whim, with aides suggesting that tariffs charged on goods from smaller African countries could top 10%. Many nations have received letters laying out a new tariff. With the pause set to expire Friday, Lesotho officials say they've not received one and they find themselves among the countries where Trump says officials simply don't have time for one-on-one negotiations. Leaders — and the 12,000 people employed by garment factories exporting to the U.S. market — are still waiting. The damage has already rippled through Lesotho's economy, where textile manufacturing comprises the largest private industry with more than 30,000 workers in 2024. For Tzicc and its customers, the threat and apparent singling out of Lesotho were enough. Management decided to rush to deliver preexisting orders before tariffs resumed. But American buyers stopped placing new orders. With no work left, virtually all the factory's employees were sent home — potentially permanently. 'Well, unfortunately, we finished,' factory compliance manager Rahila Omar said, pointing out the irony of the strategy as she walked among rows of silenced and covered machines. 'That is why now we don't have any work.' Omar is one of a handful of employees left in the eerily quiet factory. A few remain in the accounting department; others empty leftover stock to a warehouse elsewhere. Officials and workers fear this may be a sign of what's to come for other factories in Lesotho, where poverty is widespread among the population of 2 million and most textile workers single-handedly support their families. Lesotho's tiny economy was threatened with giant tariffs In March, a month before slapping Lesotho with the 50% tariff, Trump described it as a place 'nobody has ever heard of,' struggling to pronounce the nation's name in a speech criticizing U.S. foreign aid. It's true Lesotho is a 'very minuscule economy,' as its own trade minister, Mokhethi Shelile, described it. But its relationship with Washington dates back decades. The U.S. was the first country to open an embassy in the capital, Maseru, after Lesotho declared independence from the United Kingdom in 1966. The military received U.S. training, and hundreds of millions in U.S. funds were sent to Lesotho to fight the HIV/AIDS epidemic via the now defunct USAID office and the PEPFAR program. As textiles grew to become Lesotho's main export, some 75% of its product went to the U.S. Lesotho became known as Africa's denim capital. If an American purchased jeans from a U.S. brand such as Wrangler or Levi's, they may have been 'Made in Lesotho,' as tags still note. In 2000, the U.S. signed the African Growth and Opportunity Act, allowing Lesotho and other African nations to export goods to the U.S. duty free. Shelile said he was in the process of negotiating AGOA's September renewal when he was awakened in the middle of the night by texts from aides bearing news of the 50% U.S. tariffs. 'No, this cannot be real,' Shelile remembers thinking. 'What did we do to deserve this?' According to the Trump administration, Lesotho charges a 99% tariff on U.S. goods. The government here said it doesn't know how the U.S. calculated that. In theory, the tariff decision was based on trade deficit: Lesotho's exports to the U.S. were around $240 million last year — mainly clothing and diamonds — and imports from the U.S. were only $2.8 million. But in practice, the math is more complicated than that. And in reality, Lesotho simply cannot afford to import more U.S. products. Nearly half the population lives below the poverty line. 'The trade deficit that exists between Lesotho and the U.S. is a natural trade deficit that can happen when you have these types of disparities between two economies,' Shelile said. 'It cannot be breached and certainly cannot be breached by imposing tariffs.' Lesotho declared a state of emergency over unemployment Last year, Lesotho's overall unemployment rate was about 30%, national data shows. For those 35 and younger, it was nearly 50%. The threat of tariffs has exacerbated the national unemployment troubles, prompting the government to declare a state of disaster this month. 'No matter how we slice it, we've already had a lot of losses,' Shelile said. 'People have lost quite a lot money. And to claw back and come back to where we were before this is going to take time.' Most of the 12,000 people hired by Lesotho's 11 factories exporting to the U.S. are women with children to feed and school fees to pay. Of those, 9,000 jobs are directly in the line of fire and an additional 40,000 will suffer indirectly from the U.S.-imposed tariffs, Shelile said. 'We're talking people in real estate that are leasing some rooms,' he said. 'We're talking people in transport, whether it's long-distance haulage to the port, or it is a taxi driver taking people to work in the morning. They are going be affected.' Mapontso Mathunya used to work on Tzicc's cutting room floor and is now unemployed. Her husband also is out of a steady job. With two young children, Mathunya was the family's breadwinner. She now tries to sell snacks and cigarettes on the street but finds it a daily struggle to bring home even a few cents. 'Our financial burden has been heavy,' she said. 'Things are bad.' The future of this factory and others remains in limbo The future of the Tzicc factory depends on what happens Friday, compliance manager Omar said. Owned by a Taiwanese national, the factory has been open since mid-1999. In a peak month, it made up to 1.5 million pieces of clothing for JCPenney. Key U.S. customers for Tzicc — JCPenney, Walmart and Costco — did not reply to AP to comment. Pivoting to the neighboring South African market, one of the solutions proposed by the trade minister and industry consultants, wouldn't be enough to even cover the employees' payroll, Omar said. And even if American buyers return, it's unlikely the factory could rehire all its 1,300 workers, she added. Today, just a few blocks away, former employees try their luck looking for work at other factories that are still operating. Most are turned away. Monday Mornings The latest local business news and a lookahead to the coming week. 'Life is difficult,' former worker Mathunya said. 'There is nothing, nothing at all. People don't have money.' __ Pascalinah Kabi in Maseru, Josh Boak in Washington and Anne D'Innocenzio in New York contributed. ___ For more on Africa and development: The Associated Press receives financial support for global health and development coverage in Africa from the Gates Foundation. The AP is solely responsible for all content. Find AP's standards for working with philanthropies, a list of supporters and funded coverage areas at
Globe and Mail
a minute ago
- Globe and Mail
US stocks hold steady as the countdown ticks to a Federal Reserve decision on interest rates
NEW YORK (AP) — U.S. stock indexes are drifting on Wednesday as Wall Street waits to hear from the Federal Reserve later in the afternoon about what it will do with interest rates. The S&P 500 was edging up by 0.1% in early trading, coming off its first loss after setting all-time highs for six successive days. The Dow Jones Industrial Average was up 21 points, or less than 0.1%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was adding 0.3%. The bond market saw a bit more action, where Treasury yields rose after a report suggested the U.S. economy's growth was much stronger during the spring than economists expected. It grew at a 3% annual rate, according to an advance estimate, a full percentage point more than forecast. But underlying trends beneath the surface may be more discouraging. 'Cutting through the noise of the swings in imports, the economy is still chugging along, but it is showing signs of sputtering,' said Brian Jacobsen, chief economist at Annex Wealth Management. It reinforces the dilemma facing the Fed as officials prepare to vote on what to do with interest rates. They could lower rates, which would give the boost to the economy. That's what President Donald Trump has been angrily calling for. But lower rates could also give inflation more fuel when Trump's tariffs may be set to increase prices for U.S. households on their own. Trump on Wednesday announced a 25% tariff on imports coming from India, along with an additional tax because of its purchases of Russian oil, beginning on Aug. 1. That's when stiff tariffs Trump has proposed for many other countries are also scheduled to kick in, unless they reach trade deals that lower the rates. The widespread expectation on Wall Street is that the Fed will stay on hold with interest rates on Wednesday, as it's been doing so far this year following its cuts late last year. Fed Chair Jerome Powell has been insisting that he wants to see more data about how tariffs are affecting inflation and economy before the central bank makes its next move. The yield on the two-year U.S. Treasury note rose to 3.91% from 3.86% late Tuesday. It tends to closely follow expectations for what the Fed will do with its overnight interest rate. The 10-year Treasury, which also takes into account longer-term expectations for the economy and inflation, edged up to 4.36% from 4.34%. On Wall Street, stocks were mixed as most big U.S. companies continue to report profits for the spring that were bigger than analysts expected. Humana rose 4.9% after the insurer and health care giant reported stronger results for the spring than expected. It also raised its forecasts for profit and revenue over the full year. Starbucks reported a weaker profit than analysts expected as it tries to turn around its fortunes. But its stock nevertheless rose 1.6% amid hopes that improved store operations and new products — including a cold foam protein drink — will boost its performance. Companies are under pressure to deliver solid profit growth. They need to in order to justify the big jumps in their stock prices during recent months, which has caused some critics to say they look too expensive. On the losing end of Wall Street was Old Dominion Freight Line. The trucking company dropped 6.2% after reporting profit and revenue that came in just short of expectations. CEO Marty Freeman said the results 'reflect the ongoing softness in the domestic economy' and that a tough operating environment 'has persisted for longer than anticipated.' In stock markets abroad, indexes were mixed across Europe and Asia. Hong Kong's Hang Seng fell 1.4%, and South Korea's Kospi rose 0.7% for two of the bigger moves.
CTV News
a minute ago
- CTV News
Kraft Heinz sauces boost quarterly results as home-cooking rises
The Kraft logo appears outside of the headquarters on in Northfield, Ill. on Wednesday, March 25, 2015. (AP / Nam Y. Huh) Kraft Heinz beat estimates for quarterly results on Wednesday, helped by resilient demand for its pantry staples and condiments in the United States as consumers tried to stretch their household budgets. A mix of sticky inflation and heightened economic uncertainty has forced consumers to cook more affordable meals at home instead of eating out. People prioritizing protein in their diets has also boosted demand for Kraft Heinz's steak sauce and Worcestershire sauce. The company's board is 'working with urgency' to evaluate strategic options for some brands, executives said on a post-earnings call, following media reports earlier this month that it was exploring a spin-off of the grocery business. Kraft Heinz recorded a US$9.3 billion impairment charge in the second quarter due to a steady decline in its market capitalization to US$33.8 billion, with the stock value dropping about 30 per cent since 2022. The company reiterated its annual targets and now expects a cost impact of about 100 basis points this year from President Donald Trump's tariffs. Its shares were up one per cent in early trade. The Philadelphia Cream Cheese maker has worked on introducing healthier options in some categories such as desserts to capture consumer demand, and has said it would remove food dyes from its portfolio. It also announced plans to change the packaging for Kraft Mayonnaise to highlight the absence of dyes and artificial flavors, weeks after snacks giant PepsiCo PEP.O said it will rebrand its Lay's and Tostitos chips without those substances. While Kraft Heinz's quarterly volumes fell about 2.7 percentage points due to some weakness in categories such as coffee, cold meat cuts and ready-to-eat meals, the decline was lower than the prior quarter's drop of 5.6 percentage points. In North America, its biggest market by revenue, volumes fell 3.4 percentage points. 'Looking ahead, we continue to expect growth in our international business, but we are not contemplating an improvement in the U.S. industry for the rest of 2025,' CEO Carlos Abrams-Rivera said in a statement. With consumers seeking value, the company has been investing in promotions, and that, along with inflation, could pressure margins in the current quarter, said Arun Sundaram, analyst at CFRA Research. Net sales for the three months ended June 28 came in at US$6.35 billion, beating analysts' average estimate of US$6.26 billion, according to data compiled by LSEG. Its adjusted profit of 69 cents per share also beat estimates. --- Reporting by Juveria Tabassum in Bengaluru; Editing by Devika Syamnath
