El Segundo-based Mattel withdrew its forecast for a return to sales growth in 2025, citing President Donald Trump’s plan to impose tariffs on imported toys.

The company, which reported better-than-expected first-quarter results, predicted in February that sales of Barbie dolls, Hot Wheels cars and other toys would grow as much as 3% in 2025, snapping three years of flat or declining revenue. Earnings were also projected to rise.

Instead, with Monday’s first-quarter report, the company said it’s “pausing” its full-year guidance “given the volatile macro-economic and evolving U.S. tariff situation.”

Mattel manufactures 40% of its products in China, which Trump has hit with a 145% tariff on exports to the U.S. CEO Ynon Kreiz said in an interview that Mattel supports the Toy Association’s advocacy for no tariffs.

“We are taking mitigating action that is designed to offset the potential impact,” Kreiz said.

The company increased its 2025 cost-savings target to $80 million from $60 million, is diversifying its supply chain and will increase prices on some toys.

On a conference call with investors, Chief Financial Officer Anthony DiSilvestro said that the incremental impact on the company’s expenses this year at the current tariff levels would be $270 million, which Mattel expects to fully offset.

Kreiz also said on the call with investors that Mattel expected to buy less than 15% of its toys sold in the U.S. from China by 2026, and less than 10% by 2027.

The decision to withdraw the guidance cast a shadow on an otherwise upbeat first quarter, buoyed by rising sales of Hot Wheels and action figures.

Sales for the period grew 2.1% to $826.6 million, beating analysts’ projections for $788.6 million. The company’s adjusted loss narrowed to 3 cents a share and was smaller than the 10-cent loss analysts expected on average.

The quarter is typically the smallest of the year for the toymaker. Mattel said it still plans to repurchase $600 million in stock this year, with $160 million already bought back in the first quarter.

Consumer demand for Mattel’s toys was up double-digits so far in the second quarter, Kreiz said, pointing to a strong start. That quarter will also benefit from the sale of toys associated with the Jurassic World Rebirth film from Comcast Corp.’s Universal Pictures.

Trump has waved off concerns about the impact of his tariffs, saying China “made a trillion dollars” off the U.S. “selling us stuff, much of it we don’t need.” At a cabinet meeting last week he said, “Well, maybe the children will have two dolls instead of 30 dolls, and maybe the two dolls will cost a couple of bucks more than they would normally.”

Kreiz has sought to diversify Mattel’s business by producing films and TV shows based on its iconic brands, including the blockbuster Barbie which was distributed by Warner Bros. Discovery Inc. in 2023.

The initiative could be impacted by Trump’s announcement Sunday to impose a tariff of 100% on films produced overseas.

Mattel’s second film, Masters of the Universe, is set to be released in cinemas by Amazon.com Inc. in 2026. Like Barbie, much of the movie’s production took place in the U.K.

“Hollywood is the epicenter of content production globally, and we all want it to thrive,” Kreiz said. The question, he said, is how to maintain a balance of keeping productions affordable while simultaneously reinvigorating U.S. filmmaking.