Cognition Dissemination: What’s Happening with Trump’s Tariffs on Game Consoles?

President Donald Trump has been running roughshod on the US trade market by imposing tariffs on various goods coming into the United States from other countries, in the face of weak-willed rebukes from members of his own Republican Party. The biggest (though hardly exclusive) target of his ire has been China, the country he claims has been ripping the US off for the last several years in so many colorful words. This is despite him supposedly being good buddies (or frenemies?) with China president-for-life Xi Jinping.

This is also despite him being told that tariffs are essentially taxes, and how the process raises the prices of products for the US consumer. But “Donald Trump” and “listening” are not good partners.

Trump has been imposing tariffs on several goods and parts coming from China for a while now, to the point that it’s nearly impossible to remember all of them from memory. Given that video game consoles just happen to be among the goods manufactured and imported from the country, he was bound to come for them eventually. This became a larger inevitability when proposals from the Office of the United States Trade Representative in late May showed that a 25 percent tariff on gaming consoles was being considered (PDF — see pages 64 and 72). Considering the current import tax is 10 percent, this would be a steep 150 percent increase.

The threat of these being enacted was serious enough that Sony, Microsoft, and Nintendo sent a seven-page joint letter to the Trump administration, asking them to reconsider imposing the tariffs. They argued that they would significantly disrupt the way they conduct business, and how the extra costs would risk lowering the sales of their hardware. The cost, they claimed, would be passed onto the consumer, which could also put hundreds of thousands of jobs at risk. Similar letters have been sent from other organizations when the threat of tariffs have arisen, only for the president to impose them anyway. No points for guessing how this one will turn out.

Fortunately, we didn’t have to find out the effect of these… yet. Trump and Xi agreed to hold off new tariffs at the G-20 summit in Osaka, Japan at the end of June, and continue trade negotiations. Trump also promised to ease pressure on Chinese technology company Huawei, which was banned from doing business with US companies after it was credibly accused of being a spying arm for the Chinese government. Meanwhile, the US is supposedly getting better deals for farmers. These deals, like with all things Trump, sound extremely tenuous, and they’re already on the verge of being upended via Tweet.

Hardware manufacturers are also fully aware of how impulsive the current president is, and are proceeding with plans to avoid being ensnared by the Trade War. Nikkei Asian Review reported that all three companies are looking to move some manufacturing to plants outside China, joining PC hardware makers like Asus, Lenovo, and HP. The story stated that Microsoft was looking at Thailand and Indonesia, while Nintendo was looking at Vietnam. This was validated when a Nintendo spokesperson confirmed to Reuters that they’re indeed moving production of some parts for Switch and the recently-announced Switch Lite elsewhere, planned to happen later this summer.

The tariffs are being imposed to goad companies into moving their manufacturing to the US, which, while a noble goal ostensibly, is being done in the dumbest way possible. It’s true that companies have long exploited poorly-paid and poorly-treated labor in other countries to cheaply manufacture devices and parts, and it would be great if that could be shifted to a territory with better regulations for workers. But workers in the US would also want to — and absolutely should — be paid living wages with benefits for their work. If this happened, prices would be increased on the consumer before the execs take even a semblance of a pay cut.

None of this is to say that Trump and his union-busting ilk would want those manufacturing jobs to be much better here compared to other countries. They wouldn’t care if they were essentially slave labor, as long as they’re “jobs, jobs, jobs.”

These moves could affect the prices of the next-generation PlayStation and Xbox consoles, if moving the manufacturing proves to be an expensive endeavor. This is despite how they’re already promised to be expensive (say, around $499), given the specs already known about them from Sony and Microsoft. They probably don’t want to price them at the dreaded and memetic $599 when they launch, but we’ll see if they have to if they don’t want to sell the consoles at too big a loss.

Like everything else with President Trump and the whole crooked administration, this Trade War is bound to end in a gigantic disaster, at which point it will be too late to stop anything. We’ll see if console manufacturers can avert the most disastrous effects for themselves and consumers who plan to purchase their systems in the near future.