- The three major video-game-console makers – Sony, Microsoft, and Nintendo – sent a joint letter to the US government seeking exemption from Chinese tariffs.
- “While we appreciate the Administration’s efforts to protect US intellectual property and preserve US high-tech leadership,” the letter says, “the disproportionate harm caused by these tariffs to US consumers and businesses will undermine – not advance – these goals.”
- The letter is a rare instance of the big three competing game-console makers coming together.
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Sony’s PlayStation 4, Microsoft’s Xbox One, and Nintendo’s Switch may all compete for consumer attention and spending dollars, but the three major game-console makers are coming together to push back on the Trump administration’s Chinese tariffs.
All three companies are represented in a joint letter addressed to the Office of US Trade Representative’s general counsel, Joseph Barloon, sent on June 17.
The letter cites “disproportionate harm caused by these tariffs to US consumers and businesses” and asks that game consoles be exempt from the tariffs.
The reason for three competing game-console makers coming together is simple: The vast majority of game consoles made by the trio come from China – just over 95% of consoles sold in 2018 were manufactured in China, according to Trade Partnership Worldwide.
- Getty Images/Michael Kovac
Under the Trump administration’s proposed tariffs on $200 billion worth of Chinese goods, game-console makers would face a 25% tariff, an increase from the existing 10% rate.
The letter indicates that because of the small profit margins on video-game consoles, the console makers would pass the added cost on to consumers – which could have a major influence on game-console sales.
“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,” the letter says. “Consumers would pay $840 million more than they otherwise would have.”
Moreover, the letter says, the new tariffs could outright slow innovation in the American technology sector.
“There would be ripple effects extending far beyond the video game industry, because the video game industry has historically and persistently been a leader in US technology innovation in both the hardware and software spaces and beyond the game industry,” the letter says.
Above all other concerns, the letter says that – in imposing a 25% tariff on Chinese-manufactured game consoles – the goal of protecting intellectual property won’t be achieved.
Under a section labeled, “Imposing Tariffs on Video Game Consoles Would Not Be ‘Practicable or Effective to Obtain the Elimination’ of China’s Problematic IP Practices,” the letter says that Chinese game consoles are “virtually non-existent” – that the Chinese market hasn’t successfully copied the game consoles made there.
But the letter stops short of pushing back on the plan to increase tariffs on Chinese goods – instead, it seeks to make game consoles exempt.