WASHINGTON — President Donald Trump may have backed off his tariffs for most nations for the next three months while negotiating with individual countries, but he increased the tax rates on Chinese imports to 125% in a decision that has serious ramifications for many sectors, including the pleasure industry.
To get a better sense of how Trump’s tariffs are affecting the sex toy business, XBIZ spoke with a half-dozen distributors, manufacturers, and retail executives.
"I think the biggest issue for all of us is that 90% of our goods come from China, so there's a lot of uncertainty right now," confessed Dee Bertino of Fantasy Gifts, which has stores in New Jersey and Minnesota.
"There are some manufacturers who say they're not going to charge us more because the goods have already landed," she added. "But what about the second shipment or the containers that are on the boat right now? Obviously, they're going to have to charge something."
Bertino elaborated on the domino effect of tariff increases.
"Everyone has got to take a hit for this to work — manufacturers, vendors, distributors, us retailers, and the consumer," she said. "If we all take a little bit of a hit, I think we can sustain, but if everyone kicks the can down the road and the only one who's paying the end price is us and the consumer, we're going to be done."
Kate McGregor, who operates Adam & Eve franchises in Massachusetts, said she stocked up on metal butt plugs months in advance, as anything made of metal or aluminum began being subjected to higher tariffs back in February.
"I ordered quite a few in all sizes," said McGregor. "My intention is to trickle those out for the foreseeable future, and as that inventory decreases, sort of nudge people to the glass, silicone, or acrylic products, which may — or may not — be more cost-realistic."
Bertino said she also loaded up on certain products before the tariffs took effect.
"We definitely tried to stock up on as many of the hard goods as we could," she revealed. "I think with lingerie and lubricants, we had a little bit more flexibility. But a lot of the packaging comes from China, whether you're dealing with a lubricant that's made in America or lingerie that's made in Israel out of fabric that might come from Vietnam. We're such a global society that the idea that we're not all tied together is just a false narrative, obviously. There's no way that these tariffs aren't going to affect all of us."
James Roark-Gruender of Passions Adult Boutique noted that while there are American companies that manufacture lubricants, the bottles come from China, so even American-made products are being impacted.
Roark-Gruender said that he too has been loading up on inventory, though not on any one product in particular.
"I don't buy direct," he said. "I order most products through distributors, and I've been loading up, spending roughly $100,000 to order a six-month supply of all my bestsellers. But like most small retailers, I think we have 2,500 SKUs that we carry. So to just stock up on aluminum butt plugs or something would be a short-term solution to a long-term problem. We can't possibly sell enough aluminum butt plugs to make up for the cost differential."
According to Roark-Gruender, his company has prepared by storing $200,000 worth of inventory that was purchased at low prices.
"So in three months when prices skyrocket, you bring in that product, and it kind of offsets the new stuff and evens out, so you can still make money and you won't have to double the price of everything for consumers," he said.
Alexandra Fine of Brooklyn-based Dame Products said she would have liked to stockpile inventory, but it came down to a matter of cash flow.
"We've been trying to get some additional inventory over here, but we're moving through it quickly, like always, and we didn't have enough cash to buy two years of inventory in advance. The cash flow of it all is hard as it is for most small businesses. So we're just trying to be nimble and adjust quickly and not do too much work that might just go away."
Fine directed her ire at the Trump administration. Her site has added a $5 "Trump tariff surcharge" to its checkout process. Fine describes it as "a very playful way of expressing frustration and educating customers."
"It has gotten us a lot of attention," she said. "There probably will be some people who are put off by it, but it's not about how I think you should vote or whether you're a good or bad person because of your political stance. It's more about how this administration has made specific decisions that are impacting my business, and that impact will go unseen if I don't call attention to it.
"We want to use our voice and our power as a brand to be part of the overall conversation around these tariffs — both to market the brand and also use the situation to educate people on how politics impact business," Fine added.
That impact has led Bertino to wonder whether the adult industry's Trump supporters may now be second-guessing that early support.
"It's interesting — when I was in Vegas at the Altitude Intimates Show, I was talking to some manufacturers who were very pro-Trump," she said. "I think now, they're maybe going, 'Wow, I didn't think it was really going to happen.' But guess what? It really happened. So I think the message is that your vote counts, and to use it wisely."
Fine agreed strongly with that sentiment.
"I just want everybody to raise their voice," she said. "This is hurting us. It's hurting everybody. I've been surprised by people saying, 'Wow, this stance you've taken is so political and so brave of you,' or whatever. As a pleasure brand, we've always been a little bit more political because we have to be — politics are more frequently put upon us. But raising our voices and sharing that this is painful shouldn't be political. I don't think everybody staying quiet will result in an ideal outcome. Use your voice."
McGregor added, "It’s clearly a slingshot right now with this administration. As much as I hate it, it is, unfortunately, a political situation, and I don’t know if it’s going to last a week, a month, or longer. For now, though, I’m only concerned with my business. My focus is really on my relationships with my vendors, so I’m trying not to get too caught up in the politics of it all."
It is not just retailers that are being affected, however. Everyone is feeling the squeeze.
"I'm friends with a lot of manufacturers and different people who own distributing companies, and right now, you're actually better off if you're a smaller manufacturer," said Roark-Gruender. "For example, I know one who said, 'We're not going to raise our prices because we don't get another shipping container until June.' So these smaller manufacturers aren't going to have to raise their prices as quickly because they have the inventory on hand. Larger manufacturers get a lot more containers each week, so their prices are immediately going up."
Roark-Gruender also noted another significant factor.
"The other thing that most people don't realize is that the Chinese New Year has affected all this," he pointed out. "Everything was closed, so all those orders that were backed up from the Chinese New Year are now hitting the docks — and all of those orders are now subject to that 120-140% tariff, depending on whatever day it is. So it's the absolute worst time for this to happen."
Echoing Bertino, he added, "We're all going to have to share the pain," he reflected. "There's not a single retail store — or distributor, or manufacturer — that can absorb a 120% increase. What I've been trying to do with my connections is talk to people and say, 'Look, why don't we do this, and spread the extra costs across everybody, so everybody has to share in the pain and give up a little bit of their margins.'
Some companies are still in wait-and-see mode. An Eldorado Trading Company rep told XBIZ, "Like most businesses, we are waiting to see the real impact of these tariffs and adjust our plans on a day-by-day and case-by-case basis. It would be wonderful to have a crystal ball to know what the world will be like in a month or two, but unfortunately, we don’t. We aim to work with our vendor partners to lessen the impact on our customers and to keep our prices, stock, and supply chains as stable as possible. With resilience, courage, and fortitude, our industry will survive this challenge, as we have survived many others in the past."
Earlier this week, Fantasy Lingerie President Tiffany Cartigiano released a statement calling the tariffs "an evolving state of affairs" and sharing that at least some new incoming products, along with all current stock in the Fantasy warehouse, remain unaffected.
"Once we know definitively the outcome of the tariffs and any associated impacts on Fantasy Lingerie's future products, we will communicate this with as much notice as possible," Cartigiano wrote. "Although the tariffs are creating uncertainty, you can count on the Fantasy Lingerie team to continue working hard to mitigate price increases."
Cartigiano told XBIZ that things are quite hectic at the moment.
"The tariff situation seems to be escalating this week," she observed. "With tariff percentages and implementation dates changing day by day, we are closely monitoring the situation."
She added that the Fantasy Lingerie team is in close communication with its factories and working together to try to reduce potential impacts.
"We are exploring other possibilities for future production as well," Cartigiano said. "We remain hopeful and optimistic."
Fine is doing her best to remain optimistic as well, though remains cautious.
"We're all going to get screwed," she lamented. "People aren't going to have the money to buy stuff, and that's not related to a tariff. The markets haven't responded well to this. I'm definitely looking at every contract I have and reconsidering them — and not just with my manufacturers, but with my agencies and my affiliate program, as any place I can find a percentage is huge right now. This is going to have a double-digit margin impact, which will affect your bottom line."
Bertino agrees that an arduous period lies ahead for the industry.
"In 2008, we had a huge recession, and we all did fine because we were a guilty pleasure," she said. "It was a $19 vibrator that everyone could justify. But that purchase is harder to justify when eggs cost $12 and your vibrator is now $50. People aren't going to pay for that vibrator anymore, so I think we're all in a lot of trouble right now, I really do."
Looking on the bright side, Fine added, "People need vibrators."
"Somebody asked me if I thought the industry would survive," she shared. "And I'm like, 'Yeah, vibrators aren't going anywhere.' I'm not going to just leave. We're going to figure it out. I don't know if vibrators are recession-proof, as we're more of a premium category, but we'll find out.
"They might be harder to get," she said. "But pleasure will continue."
