Trump could have a devastating effect on the games industry (Getty Images/Sony/Metro)
Another Donald Trump presidency could mean an up to 40% increase in the cost of video game consoles in the US, causing chaos in the industry.
Donald Trump’s victory in the recent US elections is going to change many things, all around the world, and that includes video games. It turns out his bizarre plans for tariffs could end up making video game consoles and PCs considerably more expensive in the US – and possibly everywhere else.
The problem is that Trump has said he will impose a baseline 60% tariff on all Chinese exports, which is a huge amount and, regardless of anything else, likely to spark a trade war.
Because the majority of components are made in China, console game prices could rise by around 40% and laptops by around 46%. In order to encourage American-made goods, Trump has said that he’ll impose a 10 to 20% import tariff on any foreign goods, so even if some components are made outside of China prices will still go up.
It’s not the countries themselves that pay the tariffs though but the companies importing the goods, who will have no choice but to increase prices if they want to make any kind of profit.
The Consumer Technology Association (CTA) commissioned a report on the effects of the tariffs, which is where the specific percentages come from, and while they have a vested interest in making it look as bad as possible, in order to put people off the idea, you don’t need to know much about economics to realise that a 60% tariff is going to have a huge effect on prices.
‘Tariffs are regressive taxes that Americans pay. They’re not paid by a foreign government,’ CTA’s Ed Brzytwa told Tom’s Hardware.
‘They’re taxes that importers in the United States pay and foreign governments and foreign countries do not pay those tariffs. So when I say they’re regressive, it means that they harm poor people and people of little means more than they harm wealthy people.’
Trump already instituted tariffs of up to 50% when he was last president, but that time companies were able to successfully lobby for an exemption for electronic goods. They’ll try to do so again this time but there’s no guarantee they’ll succeed.
There seems little chance that any of the manufacturing can be moved to the US, especially not at short notice, so if an exemption is not agreed then the video games industry will be facing a major crisis.
This will affect all consoles and consumer electronics but could end up being a particular problem for the launch for the Nintendo Switch 2, which is expected to happen next year.
The tariffs don’t affect sales in other countries but if companies are making less money in the US, because their products are too expensive, then they may look to increase prices across the board to make up the difference.
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Source:: Metro
