As part of its ongoing trade war with China, the Trump administration is looking to implement tariffs that would affect video game consoles. In response to this, Microsoft, Sony, and Nintendo have penned a joint letter opposing these tariffs.
The Office of the United States Trade Representative recently proposed a 25% tariff on imported goods produced in China. These tariffs will affect game consoles, as well as their accessories such as controllers.
In their joint letter to the United States Government, the three console manufacturers stated that the tariffs would hurt not just the industry, but consumers as well. “While we appreciate the Administration’s efforts to protect U.S. intellectual property and preserve U.S. high-tech leadership,” reads the letter. “The disproportionate harm caused by these tariffs to U.S. consumers and businesses will undermine — not advance — these goals.”
Furthermore, the letter explained that 96% of game consoles that were imported into the U.S. in 2018 were made in China. Having to move manufacturing either to the U.S. or countries other than China would disrupt the companies’ supply chains. It then claimed that this would result in an increase in costs “beyond the cost of the proposed tariffs.” It’s not uncommon for video game consoles to be sold at a loss, or at least with very tight margins so this tariff would further increase those losses or make the hardware less profitable.
The letter pointed out this fact and states that the companies’ would have to increase the prices of their consoles. It even highlighted that increasing the price of new consoles by 25% would put them out of reach of American families, many of whom would be in the market for a console in the coming holiday season.
It also brought up how an increase in prices would affect U.S. based retailers and their employees in the holiday season. A significant amount of sales during this season comes from promotional offers. A price raise would severely inhibit the ability of these companies to support these offers.
Finally, the letter addressed the tariffs main goal of protecting U.S. intellectual properties from being stolen by China. It stated that, when it comes to games consoles, this isn’t an issue of concern since the country doesn’t actually produce any competing games consoles.