Since taking office in January, the Trump administration has implemented a range of tariffs on goods being imported into the country. The introductions, which came into effect yesterday, include a 25% tariff on products from Mexico and a 20% tariff on goods from China (an additional 10% on what was initially implemented on 4th February), both of which have the potential to result in a price hike for consoles and accessories and, according to Circana analyst Mat Piscatella, could bring about the death of select physical game sales.
Despite many companies, including Nintendo, Apple and Microsoft, starting to shift their production out of China in the last decade, the country remains a central hub for global hardware production. The same can be said for Mexico and disc production. The U.S. tariffs, therefore, threaten to increase production costs for developers and publishers, something Piscatella believes may lead to select companies dropping physical releases completely.
“It wouldn’t surprise me to see physical games that would be subject to tariffs simply not get made,” Piscatella stated in a recent BlueSky post, “with pubs moving to an all-digital strategy”. While the analyst admitted that production costs are a “Very small piece” of the current political climate, he described the whole situation as “a mess”.
In a press conference last month, Nintendo president Shuntaro Furukawa stated that the company was “predicting various geopolitical risks and establishing ways to respond” to the recently imposed tariffs. With production sites already in Vietnam and Cambodia, Furukawa stated that he was expecting the tariffs’ impact to be “minimal” on Nintendo’s yearly financial results, though he made clear that he anticipates “a certain impact”.
As a reminder, similar tariffs threatened increased production costs to the video game industry back in 2019, though a joint letter from Nintendo, Sony and Microsoft convinced the then-administration to allow exemptions. No such display of unity appears to have happened time, with game companies undoubtedly bracing to feel the impact of the new tariffs.
We’ll be keeping an eye out for more news on the new US tariffs and their effect on the gaming industry and will let you know if we hear any updates.
