Burlingame toy store owner warns tariffs could leave shelves empty by fall
His shelves may be stocked with different toys and games for children, but the majority of what John Kevranian sells have one thing in common.
"97% of the toys that we sell in our store are made in China," he said.
He says that's been a constant for decades, about as long as he's run his shop, Nuts for Candy and Toys, in Burlingame. But since the start of the year and especially over the course of the last month, he's dealt with a new constant: uncertainty.
"It's unpredictable what's going on with these tariffs. How do I do business without knowing what's going to happen tomorrow?" he said. "It's very frustrating not knowing day-by-day where we stand with the tariffs."
That uncertainty traces upwards. Kevranian says he's routinely receiving emails from his suppliers, saying they're raising their prices, can't fulfill orders, or aren't even ordering new products anymore, citing the Trump Administration's 145% tariff on Chinese imports.
"I'm not going to order like I used to because I'm not willing to pay the high prices," Kevranian said. "My concern is that I will get stuck with the inventory and the consumer will not buy it, I will tie up my cash flow, and that will hurt me."
John Hansen, the President of John N. Hansen Company, is one of those suppliers.
"Having empty shelves is not a regular thing around here," he said, walking through his Petaluma warehouse. "It's frustrating, especially when you have orders for stuff and you've made commitments to customers that you can't fulfill."
Hansen is a puzzle, game, and toy manufacturer and distributor who sells to around 1,500 retailers.
"Anywhere from your mom and pop toy store on the corner up to some major accounts as well," he said. "The big thing that we're telling them is, at this point, we really don't know what the tariff is going to end up being – we assume that there will be an increased tariff going forward."
Around 75% of their sales are products that come from China, per Hansen.
"We have a lot of inventory at various stages of either being ready or being made in China that at this point is just sitting there," he said. "To ship it at this point – to pay the tariff at 145% - it would no longer make sense to sell."
As a result of that?
"For the next couple of months, what is here is what we can sell," he said. "Any of the future orders that we'd normally be planning on, we can't really make any of that right now because of the uncertainty."
Hansen says in an average year, they typically bring in 40-45 containers of products from overseas.
"So far this year, we've brought in two," he said. "In the short term, we're doing OK. But this is going to affect sales."
From his vantage point, the current state of flux is throwing the future out of balance, which includes looking ahead towards the holiday season.
"The uncertainty is the biggest thing. We can't go out and quote our customers, especially the larger guys, we can't plan for the fourth quarter yet, which we'd normally be doing right now," he said. "My concern is also for a lot of my customers that are small shops that rely on turning over product regularly."
Mia Galison, the President & Creative Director of the eeBoo Corporation, a New York-based educational toy company that sells to more than 3,500 stores, says the status quo is unsustainable.
"I really want people to understand that the tariffs are not something that the Chinese, Vietnamese, or Indian manufacturers – foreign manufacturers – are paying. The tariffs are actually taxes on people like me who bring in goods to the port," she said. "When I get it to the port, whether I bring it into Long Beach or Newark, New Jersey, I then have to pay a tax to the U.S. government for whatever percentage tariff I'm affected by. In China, for example, if I were to bring in $100,000 worth of goods from China, I would owe $100,000 to my vendor, and I'd owe $145,000 to the U.S. government as a tax that comes out of my pocket. As a small business, I don't have $145,000 extra on top of what I need to pay for my merchandise, nor have I budgeted for that."
Budgeting and planning are effectively on hold, she says.
"What one does when one makes a budget – no matter what kind of business you're in, even if you're at home running a household – you look at last year's expenses, take them and put them into this year and think what's going to be up and what's going to be down?" she said. "In a circumstance where you don't know what you're going to pay for manufacturing, you really can't manufacture anything."
Galison says the ongoing trade war and uncertainty now will have long-term effects in ways people aren't currently thinking about, and forecasts consumers seeing empty shelves that go beyond her industry this year.
"What do those empty shelves signify? They signify that, that store owner didn't have enough money to buy things for their store because they were afraid that their customers would not have enough money," she said. "That means if they go into Q4, Christmas season, and they don't have stuff on their shelves in their store, they're going to go bust or they're going to have to get rid of employees or they're going to have to get rid of their storefront, which means there's a landlord there that's going to have an empty storefront."
As of now, Kevranian says he hasn't raised prices on what he sells at his Burlingame shop.
"We are going to wait and see what happens because we still have 4-5 months' worth of inventory," he said.
Like Galison, he believes inventories that extend well beyond his industry will see shortages later this year if a solution isn't found quickly.
"I believe if this tariff continues on, within the next 4-6 months, you will see empty shelves all over the country," he said.