The Trump administration’s proposed action against China would apply a 25 percent tariff to video game consoles (among other goods) and disrupt the game industry as a whole according to a letter sent to the administration earlier by the companies behind the Xbox, Switch, and PlayStation this week.
In that text Microsoft, Nintendo, and Sony argue that the disproportionate harm caused by these tariffs to U.S. consumers and businesses will undermine—not advance—” the administration’s goals. The letter, readable in full here, says that those proposed tariffs would have an “enormous impact and undue economic harm[…]on the entire video game ecosystem” and asks the administration to remove game consoles from the list of goods affected by the policy.
The three companies say that the impact would be felt across the $43.4 billion industry as a whole, affecting consumers and the more than 220,000 people working in games all at once.
“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,” reads the letter. “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 letter warns that tariffs could quite easily move consoles out of an affordable price range for most consumers, and cites a study from the Consumer Technology Association that says such an action would lead to consumers as a whole paying $840 million more for those systems.
Beyond just impacting console sales, Microsoft, Nintendo, and Sony argue that tariffs would disrupt nearly every other corner of the game industry including software and accessory sales, as well as negatively impact R&D of technology that can be applied to other industries like healthcare, education, manufacturing, and more.
“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 ripple effect of harm could be dramatic.”
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2019