The trade dispute between the USA and China is escalating. A new document lists numerous products that could be subject to tariffs. Among them are game consoles. The gaming industry is concerned. Because the tariffs could make the PS5 and the next Xbox more expensive.
What will the US government impose tariffs on? A lengthy document from the US government (via ustr.gov) proposes to impose tariffs of up to 25% on thousands of products imported from China to the USA:
- The new products would incur tariffs amounting to $300 billion per year.
- As of early May, tariffs on Chinese products amounting to $200 billion per year had already been imposed.
The current list essentially includes all products that were not previously subject to tariffs, except for some minerals and pharmaceuticals.
Which products are affected in gaming? In gaming, the following products imported from China to the USA would be affected:
- Game consoles
- Gaming controllers
- Slot machines that operate with coins or tokens
- Board games
Why would this be a problem? Gaming consoles of the current generation are manufactured in China, as well as those of the next generation:
- The Xbox One has been manufactured in South China since September 2014 (via reference.com)
- The PlayStation 4 is also produced in China. (via Kotaku)
Behind both stands the “mega-company” Foxconn. A Taiwanese company with 1.3 million employees (2015), a revenue of $135 billion (2016), and 12 factories in China.
Risk that the next consoles will become more expensive
What do representatives from the gaming industry say? There is a statement from the ESA, which is the organization behind E3.
They state:
“The video game industry contributes a trade surplus to the American economy. Tariffs will endanger the American economy, its industries, and consumers.”
Statement from the ESA
Otherwise, especially concerned board game manufacturers express their worries about these tariffs. They would likely drive prices up and quality down – probably both.
The site Game Daily points out that video game consoles are usually sold at a loss. A 25% increase could disappoint customer pricing expectations, as manufacturers would then pass on increased costs to customers.
The gaming industry is already burdened by a 10% tariff affecting chip manufacturers AMD and Nvidia. AMD is responsible for the vital internals for PlayStation and Xbox.
Does this also affect us in Europe?
The questions are open: But at the moment it is unclear,
- whether the trade dispute will really escalate and whether the additional tariffs will come at this level
- what the actual impact would be on the video game industry and how high the additional costs would be that they would incur
- whether Sony or Microsoft would only pass the potentially tariff-increased costs on to US customers or distribute them globally – then PS5 and the next Xbox could also become more expensive for us.
