Nintendo, Sony, Microsoft Submit Letter Against Tariffs
The Trump administration’s continued escalation of a trade war against China could result in consumers paying as much as 25 percent more for video game consoles, according to a letter submitted to the U.S. government co-signed by the three major game console manufacturers.
The joint statement to the Office of the U.S. Trade Representative, dated last Monday, June 17th, was co-signed by general counsel representatives from Nintendo of America, Sony Interactive Entertainment, and Microsoft, and seeks an exemption of video game systems from the list of goods subject to a proposed $300 billion worth of goods made in China. The letter alleges that 96 percent of game consoles are made in China, and would be hard to make anywhere else, meaning the increased cost of doing business would be passed onto consumers:
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. For those purchases that do go forward despite tariffs, consumers would pay $840 million more than they otherwise would have, according to a recent study prepared for the Consumer Technology Association by the independent economic group, Trade Partnership.
The proposed tariffs would not only hurt your wallet, it could also cost thousands of industry jobs, the letter argues, and have a trickle down effect on retailers such as Best Buy and GameStop – the latter already in a fairly precarious position with its 5,800 stores barely hanging on. The letter argues those retailers would be unable to offer incentives toward purchases of new systems during the critical Holiday buying period:
Given that retail margins on video game consoles are generally very tight, we see no possible reasonable scenario for retailers other than passing tariff costs down to consumers. Any
imposition of tariffs leading into the winter holidays—the strongest sales season for consoles—would have a significant negative impact on U.S.-based retailers and their employees, in particular because promotional offers on consoles are important to driving sales volume. Tariffs would make it especially difficult for both console makers and retailers to support the types of promotional offers typical of the holiday season.
Negotiations between the two countries are ongoing to avoid tariff hikes. Any decision could come as soon as this weekend at the G-20 summit in Japan. Thanks to AugieD who tipped us on Twitter.