Sony, Microsoft, And Nintendo Come Out Against Tariffs On Gaming Consoles

Sony, Microsoft, and Nintendo have joined forces to tell the U.S. government that its newly-proposed tariffs on goods imported from China would hurt consumers, put jobs at risk, and stifle innovation, according to a joint letter sent by the companies to the Office of the U.S. Trade Representative.

As part of its ongoing trade war with China, the Trump administration has proposed $US300 ($429) billion in tariffs, or taxes on foreign goods, on most consumer goods. This would include a 25 per cent tariff on video game consoles. “For those purchases that do go forward despite tariffs, consumers would pay $US840 ($1,202) million more than they otherwise would have,” the console manufacturers argue, citing a report by the Trade Partnership Worldwide economic group.

In the joint letter dated June 17, the companies say that 96 per cent of video game consoles imported by the U.S. are manufactured in China and that due to the custom hardware inside of them, they can’t easily be made elsewhere.

“The video game console supply chain has developed in China over many years of investment by our companies and our partners,” the companies say. “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.”

They go on:

“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 companies don’t speculate what the 25 per cent tariff would do the the prices that consumers will pay at the cash register, but they do argue that the effects of the increased costs would be felt throughout the industry, including by companies both big and small who make 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.”

It’s still not completely clear if and when the new round of tariffs will go into effect in the United States. Trade talks between the U.S. and China are currently ongoing, and yesterday Bloomberg reported that the new tariffs could be suspended from going into effect if progress is made at the Group of 20 summit taking place in Osaka, Japan this weekend.


Comments

    Companies have known about headwinds with supply chains for years, they knew this was coming.

    Well, Trump has been elected on bringing manufacturing back to the US, and anyone not blinded by ideology and hate would see that it is a distinct game plan from the moment tariffs were announced.

    It’d be interesting to see if instead of moving back to the US, they tried another country and if the punitive action would follow.

      The main question though is does the us have an actual manufacturing industry capable of taking over?

      Industry is really hard to build and easy to remove and with manufacturing long since out sourced by us for years now.... you would have to remake some of these industries from the ground up again and train/hire labour from scratch.

      Its all good and well to create an environment to allow local economies to get a leg up... its another issue all together if the local industry can handled it. Otherwise your going to cause unnecessary inflation due to increase of production costs.

        That's dead on, lower costs weren't the only reason manufacturing left US shores, product quality and quantity coupled with a lack of innovation also contributed it's fair share.

        It's like the British and American automotive industry and it's long standing excuse that cheaper alternatives killed domestic manufacturing but that was never the entire story, Europe and Japan weren't just delivering cheaper cars, they were also delivering vehicles with increasing performance coupled with rapidly advancing technologies.
        (Even Australia contributed massively to the industry for years in ways that haven't been well documented)

        Same with American electronics manufacturing, it literally became a joke due to its extremely dodgy quality, cheaper alternatives was just icing on the cake.

      If they choose Taiwan, guaranteed war is to follow!
      China still techincally owns Taiwan (AKA Chinese Taipei) despite their generations of disobedience.

        The Peoples Republic of China never owned Taiwan. The two regions have always been under separate governance since the communist revolution. Taiwan is still governed by the pre-revolution government, the only such region still to be so. This is the fundamental issue at stake there.

      Vietnam and Thailand have already stepped into the game, they've been quiety building their industries for years now.

    Things I'm looking forward to in 2020. PS5 and end of Trump administration.

      If Trump threatens the populace with more expensive consoles or PC parts, then this may well happen. It's the perfect way to rouse US gamers that are politically apathetic.

Join the discussion!

Trending Stories Right Now