What just happened? Trump's tariffs on Chinese imports have seemingly led to an increasing trend among companies joining their corporate hands in solidarity against the proposed price hikes. The latest include a trio of the gaming industry's leading companies—Microsoft, Nintendo and Sony—who believe that these tariffs would put more than 220,000 American jobs at risk and hurt the consumers who ultimately will pay the price for the increased cost of gaming consoles.
Microsoft, Nintendo and Sony have jointly written an open letter to the office of the United States Trade Representative, highlighting the potential negative impact of Trump's proposed tariff on Chinese goods, particularly gaming consoles, which would increase their import cost by 25% and result in "disproportionate" harm to the gaming industry.
This development echoes the same concerns voiced recently by other tech giants (including Microsoft, again) that have businesses worried about the increasing cost of proposed duties, for which the government was taking public feedback until June 25. With the letter dated on June 17, the gaming trio's apprehensions would likely have been duly noted.
The letter notes that increased tariffs on video consoles would "Injure consumers, video game developers, retailers and console manufacturers" while also risking thousands of high-value, rewarding US jobs and hurt innovation in the gaming industry and beyond.
"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. 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," the letter states.
It also points out gaming's contribution to the American culture and the economical and entertainment value the industry has provided. "The U.S. video game industry generated total revenue of $36 billion in 2017 and $43.4 billion in 2018 reflecting over 20% in growth. This industry directly and indirectly employs more than 220,000 people." It further claims that a video game player can be found in two out of three American households with 60% of them playing video games on a daily basis.
"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," claims the letter through a study conducted by the Consumer Technology Association. It also reveals a net $350 million annual loss to the US economy for each year the tariffs remain in effect.
The companies also mentioned the thin-profit margins of selling consoles to "extremely price sensitive" gamers, the costs of which are made through "sale of video games and services, which are much lower priced," the letter says, with consequential affectees of the damage being game developers and console accessory makers. "Our consoles have generated a vast ecosystem of small and medium-sized game developers. A significant number of the games played on Microsoft, Nintendo, and SIE video game consoles are not developed by our companies in-house."
"We appreciate the Administration’s consideration of this request that tariffs not be applied on HTSUS subheading 9504.50.00, covering video game consoles, and therefore that this subheading not be included in the final fourth list of products subject to Section 301 tariffs," the letter concludes, with signatures from general counsels of the three companies.