Microsoft, Nintendo and Sony join forces to oppose Trump’s tariffs on game console imports

In a joint letter sent to the General Counsel of the Office of the US Trade Representative, major video game companies Microsoft, Nintendo and Sony join forces to oppose Trump’s tariffs on game console imports.

Because video game consoles are made in China, a 25% tariff, according to the letter, would cause “enormous impact and undue economic harm” on the worldwide gaming industry.

Specifically, 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.”

Even though the big three leaders of the gaming industry do thank the government for the protection of intellectual property, they also point out how the proposal can hurt them all. “While we appreciate the Administration’s efforts to protect U.S. intellectual property and preserve U.S. high-tech leadership, the disproportionate harm caused by these tariffs to U.S. consumers and businesses will undermine —not advance— these goals.”

The message from the big three companies is clear here: “Accordingly, we respectfully request that the Administration remove HTSUS subheading 9504.50.00, covering video game consoles, from the final list of tariffs, and thus refrain from applying tariffs on these products.”

There are many reasons the gaming industry depends on consoles made in China. “In 2018, over 96% of video game consoles imported into the United States were made in China. The video game console supply chain has developed in China over many years of investment by our companies and our partners. It would cause significant supply chain disruption to shift sourcing entirely to the United States or a third country, and it would increase costs —even beyond the cost of the proposed tariffs— on products that are already manufactured under tight margin conditions. Each video game console comprises dozens of complex components sourced from multiple countries. A change in even a single supplier must be vetted carefully to mitigate risks of product quality, unreliability and consumer safety issues. Tariffs would significantly disrupt our companies’ businesses and add significant costs that would depress sales of video game consoles and the games and services that drive the profitability of this market segment.”

If the tariff goes through, it would hurt everyone who enjoys video games. “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.”

Check out the entire seven-page document here.

[Source]: Regulations.gov: P – Microsoft_Nintendo of America_Sony Interactive Entertainment – List 4. Vice.com: Nintendo, Microsoft, and Sony Say Trump’s Tariffs Will Make Consoles Cost More.