The world’s top three video game console producers, Microsoft, Sony and Nintendo have issued a joint statement opposing a proposed 25% tariff on video game consoles imported from China, proposed by the US Government.
The joint statement was published on 17 June 2019 supporting the Entertainment Software Association’s requested removal of a range of video gaming-related tariffs against China.
In summary, Microsoft, Sony and Nintendo said the tariffs would:
- Injure consumers, video game developers, retailers and console manufacturers
- Put thousands of high-value, rewarding U.S. jobs at risk; and
- Stifle innovation in our industry and beyond.
According to the statement, in 2018, over 96% of video game consoles imported into the United States were made in China. Given Microsoft, Sony and Nintendo typically don’t make profit on game console sales, they would in theory be forced to pass a 25% price increase onto consumers.
In turn, the trio argued, this would depress sales of video game consoles, which would also affect the sales of video game developers and delay other innovation beyond gaming.
The Trump Administration’s argument for the tariffs, among other things, is protecting American IP against “China’s problematic IP practices”. However, Microsoft, Sony and Nintendo noted “video game consoles are not the focus of the Chinese practices targeted by this investigation… Chinese developed and branded video game consoles are virtually non-existent.”
Discussions between the United States and China are still ongoing, so it’s unlikely a decision on implementing tariffs will be made for some time.
This isn’t just an issue affecting American consumers. If the cost of producing consoles were to increase, it would likely affect the price of consoles around the world.
It’s great to see yet another instance of game companies uniting for the greater good, even though this is very much in the interest of business success with trickle-down effects on consumers.
Without getting too deep into economic policy, in an increasingly globalised world, protectionist policies like tariffs eventually hinder growth despite short-term positives for some people.
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