The recently introduced tariffs on goods from Canada, Mexico and China by the Donald Trump administration threaten to result in higher prices and problems with the supply of gaming software and hardware to the United States. Games on discs may disappear from sale altogether, Ars Technica cites analysts’ forecasts.
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The tariffs could have the most dramatic impact on disc-based games currently produced in Mexico. A 25 percent tax on discs imported into the U.S. from Mexico could lead to a sharp decline in the production of physical games, even to the point of them ceasing production altogether and gaming platforms switching entirely to digital copies. This would accelerate a trend that has been building for years, making disc-based games a niche product.
Manufacturers that continue to produce discs will likely pass on some or all of the 25 percent duties to consumers, analysts say. Following the discs, digital copies of games may also jump in price. There is still only one way to avoid paying duties: return disc production to the United States, where it was previously. But this will require significant investment in a market segment that has already halved compared to 2021 and continues to shrink. And to recoup these investments, manufacturers will again have to raise prices.
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Trump’s tariffs could also spell trouble for the console market. About 75% of all gaming consoles sold in the US are currently imported from China, meaning they are subject to a 20% tariff. American consumers will not immediately feel the impact of the measure, as manufacturers are selling off stocks of units imported before the tariffs were imposed. But in some parts of the market, the effects have already begun to show: American online retailer Newegg has already blamed the tariffs for rising prices for new Nvidia graphics cards.
About half of Nintendo Switches are now made outside of China — the Japanese company began shifting production back in 2019, when the first threat of a trade war arose. This means Nintendo can ship units made in other countries to the US, while selling consoles made in China to the rest of the world. Microsoft began shifting production out of China in 2020 in response to the pandemic outbreak. But Sony is still heavily dependent on China — only 30% of PlayStations are made outside of China.
Trump and his administration are confident that tariffs will encourage companies to bring manufacturing back to the United States, but analysts say that is unlikely—it is “simply not economically or practically feasible, given the scale and complexity of the resources required and the underlying structure of the economic production.” But the gaming industry may be able to get a reprieve: Sony, Microsoft, and Nintendo secured support from the Consumer Technology Association (CTA) in 2019 to obtain tariff exemptions. Trump recently hinted that this round of tariffs could also include exemptions for some players.