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V O L . X X X I N O. X I M AY 1 9 , 2 0 2 5 20 S M A L L B U S I N E S S Brushing aside concerns about shortages and price increases, Trump has said, "Well, maybe the children will have two dolls instead of 30 and maybe the two dolls will cost a couple of bucks more than they would normally." Trump also defended tariffs after official data showed the U.S. economy shrank by 0.3% in the first quarter — its first retreat in three years — and has hinted that duties on pharmaceutical imports could be next. In the toy world, constantly chang- ing policies are making it hard for busi- nesses to plan ahead. Another hurdle for small businesses is the end of a special exemption that prevented tariffs from being imposed on packages from China worth less than $800. "We've always made sure our orders stayed under that amount, which makes it easier for us to bud- get," says Towle. She also recently stopped sending packages by regular mail to customers and shifted to UPS, which she finds more reliable though it's also more expensive. 'Less competition and choice' Amir Mousavian, an associate dean and supply-chain management profes- sor at the University of New England College of Business, predicts a "pro- foundly disruptive" impact on U.S. toy retailers, particularly small, indepen- dent stores with far less wiggle room on prices than chains. "Toys are a highly seasonal, price- sensitive product category, and such a steep tariff [of 145%] would either drastically raise consumer prices or squeeze retailer margins to unsustain- able levels," he says. Since small retailers typically oper- ate on thinner margins than national chains, their ability to absorb added costs is extremely limited, he notes. "For some, it could mean cutting product lines, reducing inventory vari- ety or even exiting the category alto- gether," he says. "Over time, this could lead to less competition and choice for consumers, especially in small towns and rural areas." Another complicating factor is the expected stoppage this month of all container ships from China to major U.S. ports. "Toys are a seasonal business, and inventories for the back-to-school and holiday seasons typically start arriving in late spring and summer," Mousavian says. "If container ships from China stop coming in mid-May, most retailers would have enough inventory to last through summer, but by early fall — and certainly by the fourth quarter — many shelves could begin to look sparse. Large retailers may have some buffer through exist- ing inventory in distribution cen- ters, but small retailers typically rely on frequent, smaller shipments and would feel the pinch much quicker, perhaps within 8 to 12 weeks." Even if trade routes reopen, Mousavian says it would likely take six to eight weeks for shipments to arrive for retailers to start replenishing shelves – where even a short disruption for seasonal products like toys tied to holidays or movie releases means miss- ing critical sales windows. Fast-changing policies on trade are also hard on businesses trying to plan ahead. "Overall, there's a lot of concern not just with how the tariffs are going to be implemented, but by the whiplash effect," says Curtis Picard, president and CEO of the Retail Association of Maine. "We're in the time period when retailers are looking to place orders for the holiday season, so being able to forecast what items cost and pricing are front of mind." Stocking up the toybox Maine toy merchants grappling with cost increases and supply chain bottle- necks are responding in different ways. While some are raising retail prices, others are getting a jump start on orders before tariffs kick in and shifting business models. ose who are stocking up include Emily and Paul Drappi, owners of Island Treasure Toys, which had stores in Bath, Freeport and Yarmouth when they bought the business in 2019. ey have since expanded, adding stores in Kennebunkport (in 2021) and Brunswick (in 2024). Last September, they moved the Freeport store to a bigger and more prominent spot on Main Street in a historic former library building they rent from the town. "We've seen a few increases, but nothing major just yet," Emily says in an early May phone interview hours after unpacking multiple big orders, including Legos. "We're trying to stock up as much as we can because we know the last shipments of pre-tariff toys are arriving on the West Coast right now. e pressure's on to get it in now before the prices go way up." e couple normally places holiday orders in June, which is also when Emily hopes to get a steer on what suppliers are thinking at an upcoming trade show. ...we have free business advising, workshops, and flexible financing to help you succeed. YOU HAVE BIG IDEAS... ceimaine.org 2021 2022 2023 2024 2 0 2 3 2 0 2 4 2 2 L O C A T I O N S A C R O S S M A I N E & N E W H A M P S H I R E » C O N T I N U E D F RO M PA G E 1 8 F O C U S

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