Games

Nintendo, Microsoft, and Sony Say Trump’s Tariffs Will Make Consoles Cost More

US consumers will pay a total of $840 million more for consoles than they would without Chinese tariffs, the companies warn.

by Karl Bode
Jun 26 2019, 4:42pm

Images: Getty Images

Sony, Microsoft, and Nintendo have written a joint letter to the Trump administration, warning the government that its looming tariffs on Chinese goods will dramatically harm the video game industry and its employees. The companies also argued that the 25 percent tariff hike would result in US consumers paying $840 million more for game consoles.

“While we appreciate the Administration’s efforts to protect U.S. intellectual property and preserve U.S. high-tech leadership, the disproportionate harm caused by these tariffs to U.S. consumers and businesses will undermine—not advance—these goals,” the companies said in the letter.

In the seven-page letter to the Office of the United States Trade Representative, the companies warn that 96 percent of all video game consoles were constructed in China last year, and reconfiguring their entire supply chain to dodge the costs and be in compliance would be immeasurably harmful to the sector.

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

It’s the latest criticism over Trump tariffs that experts say could impact the production costs of everything from smart thermostats to PC gaming parts, as technology giants are faced with either shifting entire manufacturing efforts to countries like Taiwan, or eating the added costs that will inevitably be passed on to American consumers.

“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 said.

“A price increase of 25% will likely put a new video game console out of reach for many American families who we expect to be in the market for a console this holiday season,” they added.