AN D’Hynenzio, AP Retail Writer
New York (AP) – A toy robot that teaches children the code. Sneakers made in the USA. Mold-resistant kitchen gadget.
According to the founder of the brand behind the stalled items, the three items are one of the new products that have been stuck in the pipeline due to President Donald Trump’s unpredictable trade policy. They say Trump’s tariffs are curbing it with extra costs and unexpected work instead of promoting US innovation.
In Vernon Hills, Illinois, learning resources, at Made Made at home in Annapolis, Maryland and Salt Lake City, Research and Development took backseats to recalculate budgets, negotiate with vendors, and track shipments in a changing customs environment.
“If you don’t have enough cash to cover what you need, do you want to risk this new thing when you don’t know how much it’s selling yet?” said Kelsey O’Callaghan, founder of the Dry House.
O’Callaghan has founded an eco-friendly home goods company with stone bath mats and currently offers around 50 kitchen and bathroom accessories. She has a new launch that is important to increase sales and attract customers.
Dry Home postponed the introduction of new products as Trump increased tariffs on Chinese products to 20% and increased the import tax rate to 145% before lowering it to 30% in 90 days. O’Callaghan said the CEO and the head of product development must be fired.
“I cover a lot of other people’s roles, so I don’t really focus on time or (innovation),” she said.
The company suspended shipments from China in early April, but stumbled back some after the president’s rate cuts. On Wednesday, Trump touted progress in US-China trade talks.
The details are still rough and the transaction has not been completed, so the entrepreneur interviewed by The Associated Press said they viewed the tariff war as an ongoing threat.
Tariffs and American innovation
The potential stunting of innovation follows an economic slowdown during the coronavirus pandemic, when companies had to put on hold projects too. Some experts believe that tariffs could once again have more lasting consequences as they rewire the market and promote business strategies.
“As executive attention shifts from innovation to regulatory compliance, innovation pipelines are suffering. Companies are optimized for political landscapes rather than technological advancements,” says Scott J. Bradford Jensen, a senior non-resident fellow at the Institute of International Economics and president of the Think Tank at the Technology Policy Institute.
Trump argued that reducing foreign imports through tariffs would help revive the decline in the country’s manufacturing bases. Analysts and various trade groups have warned that it could destroy trade ties and curb the R&D activities of US high-tech and healthcare companies where supply chains rely on international partnerships and foreign suppliers.
Small businesses that promote innovation that generates employment and economic growth are often already under strain.
With fewer staff and people with tighter budgets compared to larger companies, entrepreneurs say they spend more time reducing costs, suspending or arranging orders, and determining the amount of customs related costs to charge customers. So they spend their time coming up with their next big idea.
Schylling Inc., a Massachusetts company that produces the latest versions of lava lamps, Sea Monkeys, My Little Pony and other nostalgic toys, has products made in China. As part of a strategy to consider tariffs, the company put a group of employees on temporary unpaid leave last month to cut costs.
Beth Mullenkamp, the company’s marketing director, was one of them, but now she and several others have been permanently fired earlier this month. She pointed out that she and other staff would have normally planned the product for the last few months of 2026.
“It’s really hard to focus on innovation and creativity when it’s consumed in these daily days of how to balance books and deal with changing fees,” Muehlenkamp said.
Made Plus assembly technician Gary Brown will clean sneakers on Tuesday, June 10th, 2025, preparing for shipment at its manufacturing facility in Annapolis, Maryland.
Made Plus founder and CEO Alan Guyan holds a new colorway for the “Bangr” pickleball sneaker on Tuesday, June 10, 2025 at its manufacturing facility in Annapolis, Maryland (AP Photo/Stefannie Scarbrow)
The Maid Plus sneaker collection is on display at the company’s manufacturing facility in Annapolis, Maryland on Tuesday, June 10th, 2025 (AP Photo/Stephanie Scarbrough)
Made Plus assembly technician Andrew McLean will perform a visual check on the shoes on Tuesday, June 10, 2025, before glueing the outsole from the company’s manufacturing facility in Annapolis, Maryland to the outsole.
The tread for golf sneakers will be on display at the Made Plus Manufacturing Facility in Annapolis, Maryland on Tuesday, June 10th, 2025 (AP Photo/Stephanie Scarbrough)
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Made Plus assembly technician Gary Brown will clean sneakers on Tuesday, June 10th, 2025, preparing for shipment at its manufacturing facility in Annapolis, Maryland.
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Uneven product pipeline
Even some companies manufacturing in the US are cutting back on investment in new products. Made Plus, a Maryland company that manufactures athletic shoes at a small factory in the state’s capital, has put on hold on the planned golf line as two key components (foam insoles and treads on the soles of the shoes) are currently being made in China.
The company customizes shoes on demand and charges between $145 and $200 per pair. Footwear is made from recycled plastic bottles with advanced knitting, 3D printing and computerized stitching techniques. We are considering obtaining components from Vietnam instead of China.
Adopting new technologies is essential to restore US manufacturing capabilities and compete with Asia, Gaian said. However, given the ongoing trade friction, he said he didn’t want to invest his time or money in valuing the latest embroidery and knitting from Germany, Italy, China and the US
“We’re just slamming the hatch a bit and hopefully have enough influence to make some changes and resolve the footwear community a little and move forward,” he said of the tariff roller coaster.
In contrast, many large companies are counterfeiting it. Google Parent Alphabet plans to spend $75 billion on capital spending this year late last month, with most of the money going towards artificial intelligence technology.
What’s next for R&D?
Sonia Lapinsky, managing director of consulting firm Alixpartners, advised clients to limit tariff discussions to small group executive groups and keep the product creation cycle running.
If consumers are likely to be reluctant to open their wallets, companies have something even more important to come up with a high-profile innovation, she said.
However, small businesses may have trouble thwarting tariff discussions from other businesses.
Rick Woldenberg, CEO of Learning Resources, said about 25% to 30% of the 350 employees at the head office of educational toy companies, including education developers, are working at least part-time for tariff-related tasks.
The company typically develops 250 different products a year, and expects to remove many of the 2026 products from the drawings, Woldenberg said. While exploring factories in countries outside of China, learning resources are to slow down the next generation of interactive robots that help children develop computer programming skills through games and other activities.
Hand2mind, a family-owned business and Waldenburg’s other toy business, is trapped in a legal battle with the Trump administration. The jointly owned company has filed a lawsuit accusing the president of exceeding his authority by calling emergency laws to impose tariffs.
A federal judge last month supported the two companies in favor, and the administration appealed the decision. Waldenburg said he is ready to bring the case to the U.S. Supreme Court.
“It’s a Supreme Court victory that we need,” he said. “So, up until then, there’s no certainty. And yet, if the government is determined to be detained and uncertain, they can do that.”
Original issue: June 12, 2025, 11:49am EDT
