I've stayed away from this topic so far because I didn't have enough information yet to consider myself well informed. However I really think this is potentially disastrous new regulation for anyone selling handmade children's items. Etsy has a few good articles up here and here that do a better job than I could explaining concerns and new updates today that are encouraging. You can voice your concerns on Change.org and by all means contact your Representatives and Senators in Congress.
Please don't panic about this and close up shop. There is little chance that handmade sellers are going to face a crackdown when the big companies importing from China are a much bigger concern but the truth is we shouldn't be facing this law at all. Work to change the law, if thousands of small businesses and their customers raise their voices we'll be heard.