New tariffs rates proposed by the Trump administration could have a direct impact on the price and sales of video game consoles, and the video game industry’s three biggest console manufacturers have made their opinion on the matter known.
In a joint letter posted to Regulations.gov on June 18 and addressed to general counsel trade representative Joseph L. Barloon, Sony, Microsoft and Nintendo voiced their opposition to consoles being impacted by the tariffs proposed by the administration.
The tariffs would raise the price of importing goods produced in China from the current 10 percent to 25 percent.
This would drastically affect the price of importing consoles made in China which, in 2018, made up 96 percent of all video game consoles imported into the United States.
In the letter, the three console manufacturers lay out the many economic benefits the industry provides to the U.S., ranging from revenue provided by sales supporting the economy; to jobs being provided to developers of both hardware and software manufacturing.
They argue that by placing said tariffs on video game consoles, the benefits each provides to the U.S. economy could be drastically reduced, with jobs across the industry thrown into jeopardy as a result.
“[A]s significant as the impact of tariffs would be for video game console makers and consumers, the harm to the thousands of U.S.- based game and accessory developers who depend on console sales to generate demand for their products would be equally profound,” the letter reads. “The ripple effect of harm could be dramatic.”
Further complicating the issue would be the potential increase in price of the consoles under said tariffs.
Due to the increased cost of importing the completed consoles, the companies would be forced to raise the price of the hardware once it reaches the U.S.
This would impact not only how many consoles could be sold to retailers looking to replenish their stocks, but gamers looking to purchase said stock.
“Video game consoles are primarily sold at brick-and-mortar retailers such as GameStop, Best Buy and Wal-Mart,” the letter reads.
“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.”
It’s to this end that the companies ask the administration to revise the scope of the proposed tariffs so as not to impact the video game industry and console sales in such a manner.
Proposed back in May, the Trump administration’s latest tariffs on China are intended to apply to a wide array of goods imported from China.
The move is purported as a continued effort to address the U.S.’ trade deficit with China, though recent studies have shown the tariffs imposed so far have had a wide-reaching negative impact on the U.S. economy.
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