Chris Zephro’s warehouse full of latex masks, “Saw” movie props, and zombie apocalypse games is a testament to his love of horror.
“Horror is not necessarily Halloween. It’s really a lifestyle,” Zephro said.
But the fake blood inside his Santa Cruz, California, warehouse pales in comparison to the real-life cash bleed from his business ever since the Trump administration launched a trade war with China last spring.
Zephro’s company, Trick or Trick Studios, produces and imports goods that are sold to more than 10,000 retailers around the world, 65% in the United States. He has paid upwards of $800,000 in tariff costs so far this year. The Halloween and Costume Association said roughly 90% of Halloween products contain at least one component made overseas, most often in China.
That cost has forced Zephro to lay off 15 employees for the first time since he co-founded his company 15 years ago, which he calls “one of the worst days of my life.”
“I mean, these are friends of mine. I know their families and I’m hoping to bring them back,” said Zephro, who is also treasurer of the Halloween and Costume Association. “Unfortunately, at the end of the day the business survives or it doesn’t. And I know of a number of companies in our industry that have had to close their doors.”
President Donald Trump increased US tariffs on most Chinese goods from about 20% to 145% in April, before reducing the rate to 30% in May. Many production orders were halted in April since importers decided it would be too costly to bring them into the US for the Halloween season.
As a result, this year’s Halloween inventory will be tighter, and things will cost more. Halloween shoppers can expect to spend a record $114.45 per person this season, according to the National Retail Federation (NRF), $11 more than last year.
The Trump administration told CNN that real prosperity is “good jobs” and “booming industry,” not “cheap Chinese imports.”
“President Trump pledged to use tariffs to level the playing field, address fentanyl smuggling, and restore American Greatness,” White House Spokesman Kush Desai said in a statement. “Rising real wages, historic trade deals, and trillions in investment commitments to make and hire in America prove that President Trump’s America First agenda is paying off for the American people in the ways that matter most.”
Zephro, however, said Trump’s policies hurt US businesses like his.
“I would love to have a conversation closed doors with Trump, because he’s not an idiot. He took the same classes in business school that I took, so let’s drop the veil,” he said. “This is Economics 101. Tariffs are paid by importers.”
Avoiding sticker shock
Reyna Hernandez is piecing together a costume for her six-year-old son, who wants to dress as Carl from “The Walking Dead” for Halloween. She found an appropriate hat at Phantom Halloween in Northridge, California, but it cost $30.
“It’s just ridiculous. We cannot even afford this at all. Like, a lot of people are not going to be able to afford a costume this year,” Hernandez said, who is buying the pieces one at a time to spread out the cost.
An NRF survey found that 79% of Halloween shoppers expect to pay higher prices this year due to tariffs. Importers like Zephro absorb some of the initial cost – he said he takes on 60% to 70% – with the rest passed on to his retail customers, like Phantom Halloween’s Ryan Goldman. Goldman then must decide how much of that to charge customers like Hernandez.
“The idea is to hold as many prices as we can knowing that because of tariffs, things are going to go up,” Goldman said. “But we don’t want (higher prices) to be 100% across the board. That’s not fair.”
Costumes will likely cost customers $5-10 more this year, Goldman said. He said he’s trying to keep the price of child costumes the same, while boosting the price of adult costumes.
Prices for items produced outside of China, however, may not see much of a price increase, if at all. For example, Zephro uses a Mexican factory to produce his latex masks, which are currently not subject to tariffs since they fall under an earlier trade agreement. Goldman said some makeup will stay the same price because they’re made in Vietnam, India or the U.K.
But both decided some pieces are not worth selling this year due to import costs.
Goldman didn’t order huge, complicated props and décor this year, like the large animatronic on display in his store called “Cagey the Clown.” The 6.5-ft tall clown holding a screaming child in a cage is a holdover from last year, selling at $399.99. This year, it would have cost customers closer to $600.
Zephro also stopped production on a series of one-sixth scale action figures since they would be unsellable at higher price points. The ones he imported before tariffs are all that’s left for now.
“Until maybe the midterms,” Zephro said.
Horror for small businesses
Even if prices are holding steady for some items, the stress of tariffs is hurting every part of the Halloween industry.
The Halloween and Costume Association told CNN in an email the situation has caused significant concern particularly for “smaller manufacturers that lack the scale to mitigate cost pressures or shift operations domestically. The barriers to reshoring manufacturing are substantial, ranging from infrastructure costs and regulatory burdens to raw material availability.”
Zephro said small and medium-sized businesses like his depend on factories that are mostly overseas because regulations and taxes make manufacturing in the US difficult.
“If you really want manufacturing to come back here, you have to look at why manufacturing left and start there,” he said. “And then incentivize companies to manufacture, not penalize them for using factories that don’t exist here anymore.”
Goldman, whose family started Phantom Halloween in the 1980s, has seen all kinds of outside forces hit the business over the decades, from recessions to natural disasters to Covid-19. This year alone had wildfires and then tariffs, just as he thought inflation was behind him.
“Turns out things are kind of costing slightly more,” he said.
So all Goldman can do this Halloween is try to keep cost increases as small as possible for his customers.
“I’m not that political, so we just are dealing with the aftermath of it. The aftermath isn’t pretty because it’s going to create a financial strain on a lot of families,” he said.
No comments:
Post a Comment