Gaming is already an expensive hobby, but there’s a good chance it could get more pricey thanks to the Trump administration’s trade disputes with China and proposed tariffs that are set to increase on video game consoles by 25%. In an act of solidarity, Sony, Microsoft, and Nintendo joined together to submit a letter opposing the Trump tariffs that would heavily impact consoles, citing how video games are a key part of American culture.
In the letter, the companies note the damaging effects that imposing dramatic tariffs on video game consoles would have:
- Injury of consumers, video game developers, retailers, and console manufacturers
- Putting thousands of high-value, US-based jobs at risk
- Stifling innovation in the video game industry and beyond
The letter goes on to say that the tariffs would disproportionately harm US businesses, undermining the intended goal of retaining the US’ high-tech leadership. Sony, Microsoft, and Nintendo requested the removal of HTSUS (Harmonized Tariff Schedule of the United States) subheading 9504.50.00, which is the tariff subcategory that covers video game consoles.
It’s not just a simple request for removal of those products, however. Sony, Microsoft and Nintendo describe in detail how the video game industry contributes to the US economy in a big way. Complex global supply chains mean 96% of video game console imports come from China, despite the industry having a multi-billion dollar spend within the US.
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 ESA already filed comments of its own requesting the removal of gaming related products from the tariff list. With next-gen consoles just around the corner and 96% of video game console imports to America coming from China, a 25% tariff is a big increase. Companies are likely to pass that onto the consumer in some way, meaning American console buyers and gamers are the ones that end up taking the hit, along with the small and medium-sized development studios that already fear an unsustainable industry.
Given that retail margins on video game consoles are generally very tight, we see no possible reasonable scenario for retailers other than passing tariff costs down to consumers[…]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. Thus, these tariffs would have a ripple effect of harm that extends throughout the video game ecosystem.
These are just a few of the quotes pulled from Sony, Microsoft, and Nintendo’s joint letter. While the companies may be competitors, they understand that they need to come together when there’s a threat to the video game industry as a whole. You can read the full seven-page letter, which includes additional data and details about the harm these proposed tariffs would have on the US video game economy, and why these three industry leaders believe adding video game consoles to the tariff schedule would not accomplish the Trump administration’s intended goals.