There’s a great big trade war between US president Trump’s administration and China. Trump wants to Make America Great Again by making everything in America more expensive, by shifting manufacturing away from China. There are some unfathomable trade tariffs looming that’ll see goods involving Chinese manufacture even more expensive. While it hasn’t been implemented yet, there’s a very real possibility of a 25% tariff on things like consoles – making them more expensive to make, more expensive to bring into the US and more expensive to sell.
The big three console makers – That’s Microsoft, Sony and Nintendo – have banded together to fight the impending tariffs, saying that their implementation would harm the industry. Given that Sony and Microsoft have their new machines coming next year, while Nintendo has two rumours Switch revisions on the way, they all have a vested interest in keeping production and distribution costs lower.
In the joint letter, the video game triumvirate said that 96% of consoles imported into the US
“The video game console supply chain has developed in China over many years of investment by our companies and our partners,” the companies say in their letter. “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.”
“Each video game console comprises dozens of complex components sourced from multiple countries. 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.”
The console makers argue that the increased cost of sale would have a ripple effect, harming software companies based within the US in the long run. With fewer consoles sold, they’d have fewer homes for their games.
“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.”
The new consoles are already going to be expensive – we don’t need them to be 25% more so.
Last Updated: June 27, 2019