Microsoft, Sony, Nintendo seek tariff exemption, warn of $840M cost to gamers

By TechnologyFOXBusiness

President Donald Trump on China tariffs

The president explains his plan B on China trade ahead of the G20 summit.

Microsoft, Sony and Nintendo urged the Trump administration to exempt video game consoles from proposed tariffs on Chinese-made goods, warning that the increases would result in much greater costs for consumers and hurt the U.S. video game industry as a whole.

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In a joint letter to the office of the U.S. Trade Representative dated June 17, the three companies said that President Trump’s proposed 25 percent tariffs on $300 billion in goods, including many electronics, would translate to an additional $840 million in costs for shoppers buying video game consoles. More than 96 percent of all video game consoles imported for sale in the U.S. were made in China.

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“A price increase of 25 percent 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.

The Trump administration proposed the new tariffs after trade talks between the U.S. and Beijing stalled in May. U.S. officials have said the tariffs are part of its effort to achieve more equitable trading terms between the two nations, as well as protections of American intellectual property.

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Microsoft’s Xbox, Sony’s PlayStation, and Nintendo’s Switch are considered three of the most prominent gaming platforms. In making their case for an exemption, the three companies noted that the U.S. video game industry generated $43.4 billion in revenue in 2018 and “directly or indirectly” employs more than 220,000 people.

Aside from the impact on gaming consoles, the companies warned that the tariffs would have a “ripple effect” on small and mid-sized developers that produce games for the platforms.

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“Although we appreciate the administration’s goal of strengthening the protection of IP in China, video game consoles are not the focus of the Chinese practices targeted by this investigation,” the letter adds.

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