Those in the video game industry and consumers were given some much-needed relief today, as the Trump Administration seems to be holding off on its proposed 25% tariff that would have affected gaming consoles.
Last month saw President Donald Trump’s administration propose a hefty $300 billion set of tariffs against China in its back and forth trade war, which would have hit gaming consoles by 25%. However, talks between Mr. Trump and the Chinese President Xi Jinping at the G20 Summit in Japan this past week resulted in an announcement today by the president to delay those tariffs for now, and hopefully indefinitely.
The news comes as part of a larger commitment by both parts to resume - or even restart - trade talks. According to the BBC, during the interim, Trump is also allowing companies within the US to sell Chinese tech from Huawei, which is a major concession.
For now, the step seems to be a temporary one, as Trump has not explicitly stated if the entire set of tariffs will be canceled. However, based on the decision to allow Huawei to continue selling, it seems as though it could be a permanent move. This would be good news for video game companies, and perhaps bad news for national security.
However, as we have seen many times before, even if the delay looks to be permanent, it may not be. The decision to not proceed with tariffs may simply be a pause in hostilities before something larger comes, which has happened before between the US and China regarding these kinds of trade talks. Ultimately, it may come down to how great a risk Washington perceives Huawei to be, which Trump has connected to the issue of the trade dispute.
For those unfamiliar with how these tariffs might have impacted video game companies, consider that Microsoft, Sony, and Nintendo all use manufacturers in China. A 25% increase in tariffs would likely have a negative effect on all involved parties, from consumers who would be forced to pay more for products to developers, retailers, and manufacturers.
Recently, Microsoft, Sony, and Nintendo all collaborated to write a letter to the administration in hopes of avoiding such tariffs, as they would do nothing but hurt everyone involved. Even though the tariffs have not been officially implemented or canceled, the uncertainty seems to already be having an effect. The Wall Street Journal reports that Nintendo has moved a part of its Switch console production out of China, which would be a safeguard against future tariffs.
For now, all we can do is continue waiting to see how this plays out, though ongoing uncertainty is not going to be good for either the economy or companies looking to make video games.