By Connor Hart

Shares of Mattel and Hasbro climbed after the Supreme Court ruled Friday that President Trump's global tariffs are illegal.

Mattel's stock was recently up 2.9%, at $17.92, while Hasbro's ticked 1.6% higher, to $102.68. Shares of Mattel have fallen nearly 18% over the past year, while shares of Hasbro have risen almost 50%.

Toy companies have spent much of the past year reconfiguring global supply chains to shift production out of China, where more than three-quarters of all toys have historically been manufactured. They have also raised prices to absorb part of the higher costs.

Steep tariffs on goods from China--as well as from Southeast Asian manufacturing hubs such as Malaysia, Indonesia and Vietnam--have eaten into margins and prompted layoffs across the industry, toy-business executives have said.

Now, toy companies have created business models that are better suited to a world with tariffs.

"It's taken time, and a lot of pain and work went into trying to figure that out," said Greg Ahearn, chief executive of the Toy Association, an industry trade group. "But I think we are in as good a place as we can be as an industry heading into 2026."

Tariff relief is still welcome. The Toy Association has continually lobbied for an exemption from tariffs, similar to the one the industry received during Trump's first term. Toys were recently subject to an effective tariff rate of about 25%, whereas they could previously enter the country duty free.

Mattel and Hasbro have taken steps to diversify from the country as part of a longer-term shift accelerated under tariff threats during Trump's first term.

Mattel has spent the past few years building out a supply chain that isn't overly reliant upon any one country. The maker of Barbie dolls and Hot Wheels cars, which raised prices in response to higher tariff rates over the summer, has said it plans to have no single country account for more than a quarter of its total production by 2027.

Rival toymaker Hasbro currently manufactures about 40% of its products in China, President of Toys, Licensing & Entertainment Tim Kilpin said. The Nerf and Play-Doh maker has actively worked to diversify its operations over the past few years, including opening new facilities in Vietnam.

Write to Connor Hart at connor.hart@wsj.com

(END) Dow Jones Newswires

February 20, 2026 10:32 ET (15:32 GMT)

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