In response to the Trump Administration’s recent proposed tariff of 25% on virtually everything imported from China, console companies Sony, Nintendo, and Microsoft prepared joint statement expressing their opposition. The proposed tariff is part of an ongoing trade war between President Trump’s Administration in the United States and the Chinese government under Xi Jinping, with the Trump Administration attempting to force the Chinese government to renegotiate trade agreements in their United States’ favor.
The proposed tariff on China may negatively affect the retail price of consoles in the United States, especially influencing the price of next-generation consoles Project Scarlett and the PlayStation 5. Project Scarlett is scheduled to release during the holiday season in 2020, and the PlayStation 5, while not confirmed, is likely to release around the same time.
If implemented, the tariff may also force console manufacturing out of China. Earlier this month, the Wall Street Journal reported that Nintendo is already moving “some production” of their Switch console from China to Southeast Asia in order to “limit the impact” these proposed tariffs would have on their business. Nintendo is also rumored to be working on new versions of the Switch model, which would potentially be subject to the 25% tariff if manufactured in China.
In the joint statement to the Office of the United States Trade Representative, the corporations contest that the proposed tariff will have an “enormous impact” on the video game industry, and will cause “undue economic harm.” According to the statement, the proposed tariffs on goods manufactured in China would negatively affect all three companies’ consumers as costs increase, and development studios, retailers, and hardware manufacturers would face negative consequences as well. The joint letter claims that 96% of consoles imported to the United States are currently manufactured in China.
“While we appreciate the [Trump] 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,” reads the joint statement from Microsoft, Nintendo, and Sony.
For those purchases that do go forward despite tariffs, consumers would pay $840 million more than they otherwise would have.
“Accordingly, we respectfully request that the Administration remove HTSUS subheading 9504.50.00, covering video game consoles, from the final list of tariffs, and thus refrain from applying tariffs on these products.” The request specifies that consoles be exempt from the all-encompassing list of products the Office of the U.S. Trade Representative wants to subject to the 25% tariff, should the measure pass.
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 10% tariff.
The U.S. Trade Representative is yet to implement the proposed tariff on Chinese imports. Trade negotiations are ongoing, and Bloomberg reports that the tariff proposal may fall through if the meeting between Trump and Xi goes well on Saturday at the Group of 20 in Osaka, Japan.