Mattel's Global Supply Chain Strategy: Navigating Tariffs and Shifting Production
Mattel, the iconic toy manufacturer behind beloved brands like Barbie, Hot Wheels, and Fisher-Price, is in the midst of a major transformation in its global supply chain. Historically, China has been a cornerstone of its manufacturing operations. However, in response to shifting trade policies, the company is accelerating its diversification efforts, with plans to dramatically reduce its reliance on Chinese factories in the coming years.
Reducing Reliance on China
As of 2025, less than 40 percent of Mattel's global toy production comes from China. The company has set ambitious targets to reduce that figure to below 25 percent by 2027, and eventually, it plans to lower it to under 10 percent by the end of the decade. This shift is especially significant for the toys sold in the U.S., where about 20 percent of products are imported from China. Mattel aims to drop that figure to below 15 percent by 2026 and ultimately under 10 percent by 2027.
This change is part of a broader strategy to diversify its supply chain and avoid the financial strain of tariffs, particularly the steep 145 percent tariff on Chinese imports imposed by the U.S. government. To keep up with these demands, Mattel is ramping up its production in several other countries.
Mexico Becomes Mattel's Largest Manufacturing Hub
Mexico has quickly become Mattel's largest manufacturing hub. A $47 million investment in Nuevo León has significantly boosted the company's production capacity in the region, where over 3,500 employees now work to produce high-demand items like the Barbie Dream House, Fisher-Price Power Wheels, and MEGA Bloks. This move reflects Mexico’s appeal due to its proximity to the U.S. market, lower labor costs compared to the U.S., and favorable trade agreements under the United States-Mexico-Canada Agreement (USMCA).
In addition to Mexico, Mattel operates production plants in several other countries, including Malaysia, Indonesia, and Thailand. Malaysia, in particular, plays a key role in the production of Hot Wheels, one of Mattel’s flagship brands. The company sources products from at least seven countries, with plans for no single country to account for more than 25 percent of its global production by 2027. This diversification will help the company mitigate risks associated with overreliance on any one region.
Shifting Production and Sourcing Strategies
Mattel’s strategy to shift production from China to other countries is already underway. In 2025 alone, the company is moving the production of 500 toy models from China to other manufacturing sites. This is a significant increase compared to the 280 models shifted the previous year. India is emerging as a new manufacturing location for Mattel, and the company has begun dual-sourcing some products, such as the popular card game UNO, from both China and India to further reduce risk.
The acceleration of this strategy highlights Mattel’s proactive approach in adapting to changing trade policies. By establishing a more diverse supply chain, the company is positioning itself to better manage future trade disruptions and keep production costs in check.
Industry-Wide Impact of Tariffs
Mattel’s efforts to reduce its reliance on China are part of a larger industry trend, as toy manufacturers across the board are grappling with the impact of tariffs. According to the Toy Association, about 80 percent of toys sold in the U.S. are traditionally sourced from China. However, many companies are following Mattel’s lead and exploring alternative production locations to avoid the tariffs. In 2025, Mattel is expecting to pay an additional $270 million due to the tariffs, a cost it is partly offsetting by raising prices on some products. Despite these increases, Mattel remains committed to keeping 40 to 50 percent of its toys priced at $20 or less to maintain accessibility for consumers.
Other manufacturers in the toy industry are also feeling the effects of the tariffs. A recent survey by the Toy Association revealed that 81 percent of small toy businesses are delaying orders, while 64 percent are canceling them altogether. As companies scramble to find new suppliers and secure their products in time for the holiday season, the industry is bracing for higher prices and potential shortages.
The Road Ahead
As Mattel continues to adjust its global supply chain, the toy industry will likely face increased competition and higher production costs in the years to come. However, Mattel’s strategic diversification across multiple countries puts it in a strong position to weather ongoing tariff challenges and reduce its exposure to trade policy risks. With ongoing investments in production facilities in Mexico, Malaysia, and other regions, Mattel is poised to continue delivering popular toys to consumers while keeping prices manageable in a turbulent global trade environment.
As the company moves forward with its goal of reducing reliance on Chinese manufacturing, it will undoubtedly set the tone for the rest of the toy industry, offering a model of flexibility and adaptability in the face of ever-changing international trade dynamics.
Writer's Bio: Driven by a fascination with how young people learn, grow, and connect, Laura N. Larsson has spent years researching the role of play and social media in child and adolescent development. Since 2012, she has combined her ecommerce background with in-depth interviews of children and teenagers, producing insightful articles that explore the evolving interplay between play, communication, and online interaction. 
