Nick Mowbray: Zuru Toys co-founder on US businesses holding off on purchases as a result of Trump's tariffs

• Zuru Toys co-founder Nick Mowbray speaks on the impacts of United States tariffs on China.
• He said businesses were “in a holding pattern” as they grappled with the uncertainty of changeable policy.
• US President Donald Trump announced sweeping tariffs on April 2.

Kiwi billionaire Nick Mowbray says “it’s hard to say we’re not worried” about US President Donald Trump’s tariffs and his administration’s “chaotic” policy decisions.

“We’ll ship about $2 billion worth of goods to the US this year. So, at that run rate, that makes our tariffs worth about $3 billion at the moment.”

Speaking from Los Angeles this morning (New Zealand time), the toy mogul said it was difficult to read the mood on the ground there.

New Zealand businessman Nick Mowbray could not say he wasn't worried about the impact of tariffs. Photo / Alex Burton

The co-founder of Zuru Toys told Newstalk ZB’s Mike Hosking Breakfast it was impossible to plan around the tariffs.

He also said it would be “obviously impossible” to shift manufacturing of his products from China to the United States to skirt the 145% tariff rate.

His business, along with retailers, were “in a holding pattern”.

“It’s hard to say we’re not worried. Everything seems to change each day. We’re in a state of stopping everything at the moment because it’s impossible to plan,” said Mowbray.

“We’re all hoping it doesn’t continue for very long, but the [US] administration is definitely very chaotic.”

He believed it was possible the tariffs would ultimately be negotiated down.

Trump announced huge tariffs on different countries on April 2. In a whiplash change of tune a week later, he said all targeted countries but China would face a 10% rate for 90 days. Photo /The New York Times

The $3b worth of tariffs his company would have to pay would be passed on to consumers in significant price increases.

Mowbray said he was in the US, at his office, trying to work through the impact of the tariffs.

The US has become Zuru’s main export market, supplying the likes of Walmart, Target, Costco and Amazon.

An escalating trade war ensued after the US imposed tariffs on China, seeing Beijing put in a retaliatory 125% rate on US imports.

Trump announced huge tariffs on different countries on April 2. In a whiplash change of tune a week later, he said all targeted countries but China would face a 10% rate for 90 days.

The trade war has created fears of an economic downturn as the dollar drops and investors part with US government bonds, normally considered a safe investment, Agence France-Presse reported.

The impact on New Zealand remains uncertain. Kiwibank economists have outlined three possible scenarios for the country: Quick negotiations of tariff deals and little relative economic damage, longer dealmaking and prolonged economic insecurity, and the least likely scenario, recession.

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Episode Transcript

Speaker 1 (00:02):
He only Piven entourage fame and mister Selfridge fame, among
other things with us after eight o'clock meantime, as we
continue to swim in this area of uncertainty around the
Trump view of the world, in this tower of war,
there are a few more directly affected than the Chinese,
of course, who've currently set at a number of one
hundred and forty five percent, and within China the toy
industry is getting smashed. The irony is the toy industry employees,

(00:23):
for example, more than two hundred and seventy thousand Americans,
but eighty percent of the product, of course, is still
made in China. Anyway. In the middle of all of
this is Zuru Toys co founder Nick Mowbray, who is
with us. Nick, very good morning to you.

Speaker 2 (00:34):
Morning Mike.

Speaker 1 (00:35):
How do you plan?

Speaker 2 (00:37):
You don't? I think every day we are getting together
for a new planning meeting because everything seems to change
each day, so very very difficult to plan, very difficult
to allocate capital. We're basically in a state of just
stopping everything at the moment because it is impossible to plan.

Speaker 1 (00:56):
What do you think will happen?

Speaker 2 (01:01):
It is hard to know at this stage or the
administration seems to change their mind every day, and so
I imagine these tariffs are going to be negotiated down.
But we as a result of that, are just in
a holding pattern. More or less. I think we ship
about willship about two billion dollars worth of goods to

(01:21):
the US this year. So at that run rate, that
makes our tariff's worth about three billion dollars at the moment.
So that is obviously impossible to do. Obviously, we're moving
to sans retails, moving to a first sale model. But
at this stage a lot of retailers are just pausing,
and we're all in a holding pattern.

Speaker 1 (01:42):
Why don't you do what Donald Trump says you should do,
which is simply close everything you have in China down
and move it to I don't know, Kansas.

Speaker 2 (01:52):
Yeah, obviously impossible. America has about four percent unemployment, and
so I think in China you've got around one hundred
and twelve million people work and manufacturing. In the US
you've got about eleven million. And China has a deep
and complete ecosystem for toys. I mean, it is an
industry that moves very quickly. You've got molding, electronics, packaging, tooling,

(02:15):
and that whole supply chain is all very close together.
There's lots of competition. All the infrastructures built out, They've
got decades and decades of experience. I think sheens In
alone has more engineers that graduate every year, and manufacturing
engineers and the whole of the US. So you're in
a business that moves incredibly quickly with complex products, and
you've got the whole ecosystem that's been built over decades

(02:38):
and decades. So I think basically it is impossible, yes, exactly.

Speaker 1 (02:44):
The other thing he would want you to do is
I don't know how this works. You you might know,
you don't pass the cost on to the consumer. You
just give him some money by because you pay the tariffs.
Is his seemingly, how does that work?

Speaker 2 (02:59):
It doesn't. So at one hundred and forty five percent
tariff we have to pass through significant price increases, which
we'll see obviously volumes four off significantly as well. But
because the environment is so unstable and changing literally every day,
all our retailers in a state of parallel, a state
of pause as well at the stage, so everything is

(03:21):
just more or less in a holding pattern. Most manufacturers
are holding right now, as are most retailers, and we're
just waiting to see what's going to transpire.

Speaker 1 (03:30):
Are you worried?

Speaker 2 (03:33):
It'd be hard to say we're not worried. I think
last week was an interesting week when I was in Bentonville,
Arkansas with Walmart and Zoo won two of their seven
Supplier of the Year awards, so that was a pretty
amazing achievement. And then the very next day that the
first tariffs came into play, so we went from quite
a high to quite a low, and then obviously it's

(03:54):
escalated ever since then. So it would be hard to
say we're not worried, but we're moving, We're We're in
a lucky position obviously compared to I think a lot
of smaller supplies, smaller manufacturers and retailers in the US.
We will be able to weather this and come out
the other side, potentially even stronger. But it really depends

(04:14):
how long it continues for and of course we're all
hoping that that it doesn't continue very long. But the
administration is definitely extremely chaolic.

Speaker 1 (04:24):
Is does America feel a bit for I mean, you're
there constantly. Does America feel a bit freaky at the moment?

Speaker 2 (04:29):
Or not. Hard to know. Hard to know, to be honest,
I'm pretty much cooped up on our office and at
my place there in LA just working on this terraff
situation every day, working with our retailers. So I mean
aden about that much, apart from from yesterday I popped
down to the to the IndyCar. So it's hard to know,

(04:52):
to be honest, I think retailers are all just trying
to deal. We're all just trying to deal with the
situation as an unfolds daily.

Speaker 1 (04:58):
Jeez, all right, good to catch up. You appreciate very much.
Nick Mowbray, who's the Zuru Toys co founder? What an
insight A seventeen minutes away from May.

Speaker 2 (05:06):
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