Hobby, Toy and Game Stores NAICS 459120

Apr 27, 2026 - Regulation and Tariffs Challenge Toy Industry

• The US toy industry is ramping up lobbying efforts as tariffs and new regulations threaten to raise costs and disrupt planning, according to Legis1 News reporting. With more than 80% of toys produced in China, tariffs are driving supply chain expenses higher. The Toy Association spent $180,000 in Q1 2026 and about $1.23 million over the past year advocating for relief. At the same time, uncertainty around tariffs is complicating holiday inventory decisions, while new AI safety concerns and updated children’s privacy rules add compliance burdens. Together, these pressures could squeeze margins and create operational challenges, particularly for smaller US toy businesses.
• The global licensed toy market is on a steady upward trajectory, projected to grow from $27.2 billion in 2025 to $28.82 billion in 2026, reflecting a 5.9% CAGR, according to a recent Globe Newswire's Licensed Toy Market Report 2026. The growth comes despite broader industry headwinds, powered largely by the expanding influence of franchise entertainment IPs—from blockbuster films and streaming series to gaming universes. Brands are capitalizing on deep consumer affinity for beloved characters and stories, while the blending of digital and physical play experiences is opening new revenue streams. As entertainment ecosystems grow more interconnected, licensed toys remain a resilient and dynamic segment, benefiting from both nostalgic IP revivals and the launch of new franchises capturing the next generation of fans, per the report.

• The US toy and hobby store industry faces renewed cost pressures after a US Supreme Court ruling struck down prior IEEPA tariffs, prompting President Donald J. Trump to impose a new 10% tariff on all US imports effective February 24, 2026, for 150 days, later signaling an increase to 15% (the maximum allowed), according to a report in The Toy Book. USMCA-compliant goods from Canada and Mexico are exempt, while Section 232 and 301 tariffs remain in place. The impact on toy retailers and suppliers is immediate. Family-owned education companies Learning Resources and hand2mind, which employ 500+ workers, were among the plaintiffs challenging earlier tariffs. The Toy Association is calling for refunds of tariffs paid over the past year and for toys to be excluded from future duties, warning that additional costs could limit small businesses’ ability to invest in employees, spur innovation, and keep toys affordable for US families.
• US toy and hobby stores face mounting profit pressure as returns and shrink reached $796 billion in 2025, according to Appriss Retail’s 2026 Total Retail Loss Benchmark Report in Chain Store Age. Of the $706 billion in total merchandise returned, 14.2% ($100 billion) was preventable loss tied to fraud and abuse, including 12% from returns abuse and 2% from fraud. Shrink accounted for another $90 billion, with 73% preventable, driven by employee theft ($26 billion), inventory errors ($19 billion), operational errors ($12 billion), and organized retail crime ($9 billion). In-store returns made up $367 billion (52%), while buy-online-return-in-store totaled $208 billion (29%) and is the fastest-growing fraud vector. For specialty toy and hobby retailers, high return volumes and preventable shrink threaten margins, even as 80% of shoppers say a good return experience boosts repeat purchases and 73% make an extra purchase after a positive return.