If you keep up with global politics or live in North America, you may have been heard about the recently proposed tariffs for Chinese goods from the Trump administration.
In rare cases, Nintendo, Sony and Microsoft united their efforts (in a seven-page letter) to alert the US government to the impact that this might have on the video game industry – explaining how a 25 percent increase in the tariffs will result in a payment of more than $ 840 million more for their consoles.
This letter explains how 96 percent of all video game systems have been constructed in China last year, and they need to redesign the supply chain to avoid these costs, which is likely to cause significant changes.
The video game console supply chain has evolved in China for many years of investment by our companies and partners. This would lead to significant supply chain distortions by completely redirecting its sources to the United States or a third country, and would increase costs, even above the cost of the tariffs offered, for products already produced under tight marginal terms.
Further, it states how the proposed tariffs "will suppress sales of video game consoles and games and services that stimulate market profitability," and a 25% increase would likely put the new consoles "out of reach" for the average American family this holiday.
At this point, trade negotiations between the US and China continue. These newly offered tariffs can stop if significant progress is made at the G20 summit in Osaka this weekend.