Sony, Microsoft, And Nintendo Unite Against Trump’s Gaming Console Tariffs
If you’ve ever wondered what it takes to get Sony, Microsoft, and Nintendo to put their differences aside and team-up, it turns out the answer is President Donald Trump.
Everybody’s favourite hairpiece recently proposed tariffs on goods imported from China that don’t seem to have gone down well with anybody in the video game industry. A joint letter sent by the three companies to the Office of the U.S. Trade Representative claims that these tariffs would hurt consumers and put jobs at risk.
The Trump administration’s proposed $300 billion in tariffs would, among other things, impact manufacturing their game consoles in China and include a 25 percent tariff on video game consoles, which would likely raise the price of hardware for consumers going forward.
The console manufacturers argue in their letter that “for those purchases that do go forward despite tariffs, consumers would pay $840 million more than they otherwise would have.”
96 percent of video game consoles imported by the U.S. are manufactured in China, the companies argue. They also write that these consoles aren’t easily made anywhere else in the world, due to the custom hardware inside them.
The video game console supply chain has developed in China over many years of investment by our companies and our partners. It would cause significant supply chain disruption to shift sourcing entirely to the United States or a third country, and it would increase costs—even beyond the cost of the proposed tariffs—on products that are already manufactured under tight margin conditions.
The three companies also note that “each video game console comprises dozens of complex components sourced from multiple countries” and that “a change in even a single supplier must be vetted carefully to mitigate risks of product quality, unreliability and consumer safety issues.”
Tariffs would significantly disrupt our companies’ businesses and add significant costs that would depress sales of video game consoles and the games and services that drive the profitability of this market segment.
While it’s not entirely clear just how much this would impact the actual price of hardware for retailers (and as a result those of us that buy said hardware), but the companies suggest it would certainly harm consumers and developers alike, causing a “ripple effect” that will be felt throughout the industry.
Because of the deep interdependence of video game consoles and game software, and due to the price sensitivity of video game console purchasers, tariffs on video game consoles would not only harm our companies, consumers, and retailers, but will also disproportionately harm the thousands of small and medium-sized software and accessory developers in the United States,” the companies say. “Thus, these tariffs would have a ripple effect of harm that extends throughout the video game ecosystem.
Trade talks between the U.S. and China are currently ongoing, so nobody yet knows exactly if or when these tariffs would go into effect. However, Bloomberg reports that if talks go well during the G20 summit taking place in Osaka, Japan this weekend, the tariffs could be suspended.
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