Misfit Toys, a beloved toy store with two locations in Houston, is facing an uncertain future as new tariffs on Chinese imports threaten their business operations. Owners Daniel Rivera and Paulina Gamino recently made the difficult decision to cancel a $10,000 order from a Chinese supplier due to a sudden surge in tariffs, which made the purchase financially untenable.
The couple had intended to use the new inventory of rare Transformers toys for the grand opening of an expansion dedicated to the franchise, scheduled for May.
“We had budgeted $10,000,” Gamino explained. “But the estimated costs keep changing—sometimes up by 30% or even 100%. How do you budget for that uncertainty?”
In an ongoing trade dispute between the U.S. and China, President Donald Trump has imposed tariffs on numerous goods from China, with import taxes reaching as high as 145%.
Toys, games, and sports equipment make up a significant portion of U.S. imports from China—approximately $32 billion in 2024, according to TradingEconomics.com, placing them third behind electronics and heavy machinery.
For smaller retailers like Misfit Toys, this escalating trade war presents daunting challenges. Rivera and Gamino are now forced to redirect their financial strategies and seek alternatives to imported toys.
The uncertainty brought on by these tariffs is impacting their holiday sales preparations, which they typically start planning immediately after Christmas.
Rivera remarked, “We start prepping for Christmas the day after Christmas, so this timing is incredibly problematic.”
In addition to shifting their budget, the couple has received alarming communications from major wholesalers they collaborate with for toy inventory.
“We’ve received very scary letters stating that even though they won’t immediately pass the tariffs on to their customers, we need to be prepared for what’s to come,” Rivera said.
Gamino added, “We can’t expect our customers to pay $50 for a Marvel Legends figure instead of the usual $24. That’s just not realistic.”
To navigate the mounting costs associated with new inventory, Rivera and Gamino are turning to the collector market, sourcing vintage toy collections from across the country.
This month, they are even traveling to Chicago in search of Transformers that are not subject to the inflated import markup.
As a small, independent toy store, Misfit Toys lacks the financial flexibility of corporate chains.
The store prides itself on its carefully curated selection and personalized shopping experience, which Rivera believes sets them apart from retailers like Walmart and Target.
He emphasized, “This isn’t Target. This isn’t a Walmart. If we close one of our locations, that’s it. It’s lights out for us.”
Rivera and Gamino feel left in the dark about how these new tariffs are supposed to benefit small businesses like theirs.
“No one is really telling us how these tariffs are beneficial,” Rivera said. “All we see and hear is just bad news regarding their impacts on us.
Inquiries by Houston Public Media to organizations advocating for small businesses and the toy industry yielded no comments regarding the ramifications of tariffs.
Both The Toy Association, a lobbying organization seeking tariff exemptions for toys, and the Greater Houston Partnership, a local economic development group, declined to comment on the situation.
The Small Business Administration also did not respond to requests for comment prior to publication.
According to the International Trade Administration, the U.S. imported nearly $439 billion in goods from China in 2024, with toys carrying cultural significance and providing critical revenue for small retailers like Misfit Toys.
Rivera, who has spent over 20 years in the toy industry, expressed concern that they have had to lower expectations for this year’s fourth quarter, despite having experienced record sales in 2023.
Though the couple remains hopeful in their ability to adapt and endure this difficult phase, they stressed the necessity of greater transparency and support from policymakers, not just for their business, but for the entire network of small businesses grappling with similar challenges across the nation.
“We did phenomenal business last year,” Rivera reflected. “Now we’re questioning whether we have to dip into retirement savings just to keep the stores open.”
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