Why it matters: The trade agreement signed by the US and China last month has seen both video game fans and the industry breathe a sigh of relief, as it will prevent an increase in price for the PS5 and Xbox Series X.
The “Phase One” agreement put a hold on Donald Trump’s proposed 25 percent tariffs on $160 billion worth of goods made in China, which included consoles. In all likelihood, the tariffs would have made the next-gen machines from Microsoft and Sony more expensive due to them being manufactured in the country.
In June last year, the threat posed by the tariffs resulted in Microsoft, Sony, and Nintendo joining forces and jointly writing an open letter to the office of the United States Trade Representative. The gaming giants said the extra import costs would cause “disproportionate” harm to the industry.
A few months later, a Sony executive reiterated that if the tariffs went through, the company may be forced to pass the costs onto consumers.
But the signing of the Phase One agreement appears to have put fears of a price increase to rest. In a statement to Polygon, the Entertainment Software Association said: “We are encouraged that the Administration suspended the implementation of tariffs on video game consoles and controllers. These tariffs would have significant implications for our industry, which boasts a trade surplus for the American economy. Tariffs will erode innovation, decrease job opportunities for American workers, and increase prices for consumers.”
It's not just consoles that have been spared a price increase. The agreement has also stopped tariffs on some of Apple’s most popular products, including iPhones, iPads, and MacBooks, which could have seen the company increase its prices.