Under the looming cloud of the US-China trade war, almost every industry is running the risk of incurring higher tariffs on items imported from China. That includes the gaming console industry, with consoles like the PlayStation 5 and the Xbox Series X expected to be launched later this year.
However, the US and China have reportedly signed a new Phase One agreement in December, under which the Trump-proposed 25% tariffs on electronics made in China will not go into effect. This is great news both for the console industry and for consumers, since this means the prices of the upcoming next-gen gaming consoles from Sony and Microsoft will likely not be affected by the ongoing trade war.
In response to the news, the Entertainment Software Association said “We are encouraged that the Administration suspended the implementation of tariffs on video game consoles and controllers,” in a statement given to Polygon. The association also added “These tariffs would have significant implications for our industry, which boasts a trade surplus for the American economy. Tariffs will erode innovation, decrease job opportunities for American workers, and increase prices for consumers.”
Back in 2019, Microsoft, Sony, and Nintendo had come together to write a letter opposing Trump’s proposed tariffs saying that the tariffs will cause disproportionate harm to consumers and the industry.
In an attempt to avoid such tariffs, Nintendo also moved its Nintendo Switch Lite manufacturing outside China. Others, such as Sony, warned consumers that prices of the upcoming console might increase due to tariffs, while Microsoft said the Series X pricing will depend on what happens with China.
While all that is good news, materials manufactured in China will still be covered under tariffs which means a lot of the components used in making consoles like the PS5 and the Xbox Series X will likely be priced higher than usual. That might affect prices as well, but the Game Manufacturer’s Association told Polygon that it remains hopeful to see these tariffs rolled back as well.