The video game business seems set to be struck by US tariffs in a bad way, if the government doesn’t take it back.
As shared on ResetERA by user Idas, Nikkei reports that game companies like Sony, Nintendo, and Microsoft are set to be hit by tariffs that can reach as much as 145 %.
This was not from an external market analyst, but from a company that supplies parts to Apple and Nintendo. In the company’s internal assessment memo, both Apple and Nintendo products are about to receive that massive hit.
This assessment was no doubt partly driven by the latest report on tariffs. Technology and economics analyst Ray Wang shared on Twitter that US Customs and Border Protection shared detailed guidelines on tariff exemptions for specific consumer tech products, as well as the components found in those products.
The list seemed exhaustive on the face of it, including products like smartphones, SSDs, computers, etc. However, as Dr. Serkan Toto verified, the tariff category for game consoles was not listed in the US Customs’ document. That is a clear message that video game consoles are not exempted.
This flies in the face of some analysis that some video game related products could be exempted. For example, Christopher Dring of The Game Business claimed that the Nintendo Switch and Switch 2 cartridges, which are the same tariff category as SSDs, should be exempt from the tariffs, as would be the case for other components used in video games and other devices.
It should also be said that this list is subject to change, as the US Customs’ declaration is itself a change from the original policy that laid out a complete sweeping tariff of all consumer products entering the US. But even if some video game related products would technically be exempted from tariffs, there will definitely be a carry-over effect from the main console business receiving these severe tariffs.
While these tariffs will hit all consoles, Nintendo is in a particular dilemma with the Switch 2. They are just about to launch the next generation console, unlike their peers in Sony and Microsoft. Even Sony’s prohibitively expensive PlayStation 5 Pro has had a few months to be shipped and partitioned in the US and different parts of the world.
The big issue facing Nintendo right now isn’t actually price but supply. While most of their console manufacturing is still being processed in China, they just launched manufacturing work in Vietnam. China is facing the brunt of US tariffs, with Vietnam being positioned as US’ pivot away from China. As a result, rumors surfaced that Nintendo rushed to send as many of their Vietnam manufactured Switch 2 consoles to the US as possible.
Tech companies like Nintendo started shifting some of their business out of China in anticipation of this exact scenario. However, because they didn’t commit and move fast enough, the tech industry as a whole is set to face dire consequences. It’s entirely possible that this could lead to the intended outcome of the tariffs, with tech companies being forced to follow through in exiting China.
But because of the particular ways that the US government implemented this, the transition is bound to come with layoffs, if not even worse consequences. To avert the worst from happening, it’s imperative that the government makes further revisions to their policy to secure those exemptions for the video game industry.
