Microsoft, Sony and Nintendo have teamed up to write a letter to the US Government protesting tariffs on Chinese-made goods proposed by President Trump, which would be imposed on the platform-holders’ consoles if implemented.
The joint letter is signed by Microsoft VP and deputy general counsel Linda K Norman, Nintendo of America general counsel and executive VP of business affairs Devon Pritchard and Sony general counsel, senior VP, legal and business affairs Jennifer Liu. In it, the console manufacturers say: “As leading video game console manufacturers, we submit this separate submission to highlight the enormous impact and undue economic harm that proposed tariffs on video game consoles would have on the entire video game ecosystem.”
The letter continues: “In particular, tariffs on video game consoles would: injure consumers, video game developers, retailers and console manufacturers; put thousands of high-value, rewarding US jobs at risk; and stifle innovation in our industry and beyond. While we appreciate the Administration’s efforts to protect US intellectual property and preserve US high-tech leadership, the disproportionate harm caused by these tariffs to US consumers and businesses will undermine—not advance—these goals.”
The tariffs, which were proposed in May, would mark an escalation in Trump’s trade-war with China, which was recently exacerbated by Trump’s US ban on Chinese mobile phone manufacturer Huawei. The letter points out that: “In 2018, over 96% of video game consoles imported into the United States were made in China. The video game console supply chain has developed in China over many years of investment by our companies and our partners. It would cause significant supply chain disruption to shift sourcing entirely to the United States or a third country, and it would increase costs—even beyond the cost of the proposed tariffs—on products that are already manufactured under tight margin conditions.”
The letter goes on to spell out the knock-on effect that the tariffs would impart on the wider games industry in the US: “Given that the main purpose of video game consoles is to play games, as significant as the impact of tariffs would be for video game console makers and consumers, the harm to the thousands of US-based game and accessory developers who depend on console sales to generate demand for their products, would be equally profound. The ripple effect of harm could be dramatic. Our consoles have generated a vast ecosystem of small and medium-sized game developers.”
Pointing out that Microsoft, Sony and Nintendo sell consoles: “Under very tight margin situations, meaning that we price video game consoles at—or slightly above—cost to make them as affordable as possible,” the letter asserts: “A price increase of 25% will likely put a new video game console out of reach for many American families who we expect to be in the market for a console this holiday season. For those purchases that do go forward despite tariffs, consumers would pay $840 million more than they otherwise would have.”
US videogames trade body the Entertainment Software Association (ESA) has already made a submission to the US Government that the videogames sector should be exempt from the proposed tariffs, and this unusual joint letter from three companies that are normally seen as deadly rivals is designed to emphasise the industry’s support for that proposal by the ESA.
To see how this plea for a pragmatic, rational – as opposed to dogmatic — approach from Trump’s administration plays out, your best bet is to keep an eye on the ESA’s website.