Will Trump's Tariffs Impact Video Game & Console Prices? Insights Revealed

During this election season, US President-elect Donald Trump has been vocal about tariffs. Specifically, he has discussed imposing tariffs of 60% or more on products imported from China. As video game consoles and related products are produced in China (at least partially), many are concerned about how these tariffs could affect consumers.

How Trump's Tariffs Could Reshape the Video Game Market

Tariffs and the Video Game Console Market

The US is the largest console market worldwide, making up 45% of total game spending and 35% of console hardware sales volume. Even a tariff on console hardware and accessories could disrupt the global console market, undermining US hardware sales, delaying consumer adoption of new consoles, and reducing consumer spending on games. For example, the potential impact on the Switch 2 is significant. Without new import taxes, the Switch 2 is expected to launch in Q2 2025 at a higher price point than the original Switch. If new tariffs come into play, it could lead to an even higher price, which could dampen consumer demand.Serkan Toto of Japanese consulting firm Kantan bluntly stated that the effects of new import taxes would be devastating for game fans. The US consumer would bear the burden, not China.

Impact on Video Game Prices

The Consumer Technology Association (CTA) reported that new import taxes on technology products would increase prices across the board. Video game consoles could see up to 40% increases in sticker cost. For instance, a PS5 could cost $800 instead of $500 in the US, and game prices could jump from $70 to $112. However, this is speculative and uncertain. Walmart and Best Buy have said Trump's import tax proposals could lead to significant price increases for all goods.For new game hardware, companies like Nintendo, Sony, and Microsoft can manufacture their systems in no-tariff countries or the US. For example, Nintendo is already producing around 50% of Switch consoles outside of China. But if Trump's import tax plans go ahead, it could lead to higher Switch prices and potentially a higher price for the Switch 2.For physical games, an import tax would prompt an increase in prices to consumers. Publishers might raise digital game prices to be at parity or abandon physical games altogether.

Potential Exemptions and Industry Responses

During Trump's first presidency, the CTA worked with Microsoft, Sony, and Nintendo to push back against proposed tariffs and succeeded. If Trump's proposed tariffs go ahead, there is a possibility that video game products could be granted an exception. The CTA has already expressed concerns about the trade taxes and estimated that they would affect more than $350 billion worth of US imports on technology products.Joost van Dreunen, an adjunct professor at NYU's School of Business, expects Microsoft, Sony, and Nintendo to band together again to seek an exemption, just like they did years ago. GameSpot has reached out to these companies to find out their plans, but none have responded at press time.

Changing Consumer Behavior Due to Tariffs

With console prices potentially going up, consumers might look for "hardware-independent" ways to play games. Microsoft is already pushing into cloud gaming and streaming services with Game Pass. Sony might also explore lower-cost distribution alternatives, such as the PlayStation Portal device. These tariffs could accelerate the industry's shift towards cloud gaming and streaming services.In conclusion, the impact of Trump's proposed tariffs on the video game industry is complex and uncertain. There are many unknowns, and the outcome will depend on various factors such as legislative actions and public sentiment.