Credit: Inside the MagicOn April 2, Disney’s stock was trading at just below $98 a share. A few hours later, President Donald Trump announced massive tariffs on nations around the globe.
Since that moment, Disney’s stock has lost 13 percent of its value, ending this week trading below $85 a share. While most of the tariffs have been delayed, Trump instituted a 145 percent on goods brought into the country, while China countered with a 125 percent tariff on the U.S.-made goods.
The market has realized that a trade war with China could be incredibly bad for The Walt Disney Company, especially after China threatened to ban films made in the United States from the Chinese market.
Disney makes around $12 billion a year on merchandise sales, including everything from T-shirts to toys. A large portion of that merchandise is made in China, which means that goods entering the country are now subject to Trump’s tariffs. That cost will be passed along to the consumers buying those goods.
Disney is also in the process of building another cruise ship in Germany, using Chinese-made steel, which is also subject to those tariffs. And then there are the films.
Zootopia (2016) made $246 million in China, while the first two Avatar films cleared over $500 million from the Chinese market. With those films having sequels in the coming months, Disney was expecting another Chinese payday.
So, given all that could possibly go wrong with these tariffs and Disney’s place as a global company, are they worried about the economic situation and the potential of what could happen next? Apparently not.
Despite Disney CEO Bob Iger showing up at an ABC News meeting and warning of the potential dangers of these tariffs, an unnamed Disney executive said that the company is not worried. He told The Wrap:
We’re not panicking. We are waiting and seeing.
However, another executive admitted to The Wrap that Disney’s exposure was “significant” due to these tariffs, but it was still too early to know just how significant the disruption to Disney’s bottom line it would be.
Despite Disney’s wait-and-see attitude, more bad news is on the horizon. CNN reported that consumer confidence is at its second-lowest level since 1952.
Low consumer confidence makes people less likely to spend money on unnecessary items like a Disney World or Disneyland vacation. Much like Disney, only time will tell how much this will affect the company’s bottom line. We will wait and see.