A new report this week from GameDaily proposes that the ongoing trade war between the Trump administration in the United States and the Chinese government under Xi Jinping could have a direct and significant impact on several types of gaming, including consumer gaming consoles.
The tension over the proposed tariffs has escalated recently, with the United States raising tariffs on Chinese goods periodically since the middle of last year. The Office of the United States Trade Representative is now proposing 25% tariff on thousands of different consumer goods and far it’s the most expansive list to date, representing an annual trade value of approximately $300 billion.
Tariffs are an expense similar to tax that domestic companies incur, and the burden of that buck tends to get passed along to the consumer in the form of higher costs at retail. Electronic gaming has already been suffering under these taxing trade conditions — AMD, Intel, and Nvidia all saw their share prices drop when news of the 25% tariff increase hit, as Chinese-manufactured graphics cards are already subject to a 10% tariff.
There are several categories specific to hobby gaming. In addition to graphics cards and semiconductors, video game consoles and accessories, arcade machines, arcade machine parts, and various things needed for traditional tabletop and board gaming would all potentially be subject to the tariff.
GameDaily spoke to Stanley Pierre-Louis, President of the Entertainment Software Association about the proposed tariff. The ESA is the lobbying party representing the video game industry. The ESA responded negatively to the tariff, stating that “the video game industry boasts a trade surplus for the American economy. Tariffs will hurt the American economy, its industries, and its consumers.”
With next-generation consoles most likely debuting on the market starting in 2020, the proposed tariffs on Chinese-manufactured consumer goods make the upcoming future a very sensitive time for the video game industry. Sony’s PlayStation 5 is right around the corner, and concerns have already been expressed around the cost of the console. Microsoft also has big plans of their own for their immediate future that they plan to share at E3 this year. The two industry giants are also joining forces to develop tech together, with a specific focus on semiconductors and cloud computing, both of which are sure to be affected by the tariff situation.
Gaming can be prohibitively priced during times of favorable trade conditions, even with consoles often selling at loss as a gesture of good faith. In no world does an additional 25% tariff help lower the final cost of a next-generation console during the holiday shopping season.
Tabletop games will also be directly affected by the tariff, and a section in the proposal, 9504.90.60, specifies “chess, checkers, backgammon, darts and table and parlor games played on boards of a special design and parts thereof; poker chips and dice.” Playing cards are also listed. Tabletop gaming has increased in popularity recently, in part because of crowdfunding platforms like Kickstarter. Tabletop gaming is an $11 billion industry, and a 25% tariff could mean a major roadblock to its ongoing growth. GameDaily reports that the Chief Operating Officer of White Wizard Games Debbie Moynihan is anticipating an industry-wide reorganization and prices rising up to 10% for consumers.
The United States Trade Representative will hold tariff hearings beginning on June 17th, and if implemented the tariff would go into effect as early as June 24th, massively effecting both the electronic and traditional gaming industries before the end of the fiscal year. The hearing falls a bit poetically between E3 and Gen Con, the largest tabletop gaming convention in North America. The tariff trouble is sure to be a topic at the forefront of everyone’s minds.