Inside Zuru’s US empire: Nick Mowbray talks tariffs and toy trademarks

Toy and consumer goods empire Zuru has found a means to reduce the tariff it pays on Chinese goods imported into the US to around 15% as it continues to navigate the volatility surrounding global trade.

Using a process called a first cost model could reduce the total tax Zuru would pay annually to around $300m on a 15% effective tariff, compared with an initial figure chief executive Nick Mowbray warned would be closer to $3 billion, based on an earlier 145% tariff rate.

“So, China then, at that tariff rate, still becomes by far the best place in the world to manufacture,” Mowbray told Markets with Madison at Zuru’s office in Los Angeles.

“Whilst we might see some small price increases, very tactical price increases in some areas, the cost impact is not going to be significant.”

The model effectively allowed Zuru to pay taxes calculated based on the production cost of its imported goods, not the retail price, he explained.

While tariffs applied to toys had also been reduced to 30%, from 145%, Mowbray said.

The company imported about $2 billion worth of goods from China to the US every year.

Tariffs were just the latest test for Zuru - a company started from scratch by Nick, his brother Mat and sister Anna. It has navigated the complexities of trademarks and toy invention intellectual property rights for years.

“Literally, from the first day we got into this, we were sued,” Mowbray said.

“It really is a game of grit and perseverance.”

Go inside Zuru’s toy showroom in LA, and hear Nick Mowbray discuss US-China tensions, including if large scale domestic manufacturing could ever be rebuilt in the United States, in today’s episode of Markets with Madison above.

Madison Malone travelled to the United States with support from the NZUS Council Media Fellowship programme. The Council is committed to advancing New Zealand’s shared interests with the United States. Find out more about the NZUS council here.

Get investment insights from executives and experts on Markets with Madison every Friday here on the NZ Herald, on YouTube and wherever you get your podcasts.

Sponsored by CMC Markets.

Disclaimer: The information provided in this programme is of a general nature, and is not intended to be personalised financial advice. We encourage you to seek appropriate advice from a qualified professional to suit your individual circumstances.

Madison Malone (nee Reidy) is host and executive producer of the investment show Markets with Madison. She joined the Herald in 2022 after working in investment, and has covered business and economics for television and radio broadcasters.