Microsoft, Nintendo, and Sony — the tech companies behind popular consoles Xbox One, Switch, and PS4, respectively — have submitted a joint letter to the United States government expressing concerns over proposed tariffs that would impact manufacturing their game consoles in China.
In the letter, dated June 17 and addressed to Joseph Barloon at the Office of the United States Trade Representative (USTR), the industry leaders explain how tariffs on video game consoles hurt consumers, developers, retailers, and manufacturers alike. The USTR’s tariffs also “risk job losses in the industry,” and “stifle innovation.”
Microsoft, Nintendo, and Sony point out in the letter that in 2018 over 96 percent of video game consoles were built in China, so redirecting one hundred percent of manufacturing to the US or another country would disrupt the current supply chain and raise costs, "even beyond the cost of the proposed tariffs."
"In a single year (2018), our three companies collectively sold more than 15 million video game consoles in the United States alone. Together, we currently employ nearly 8,000 people across the United States," the letter states, additionally noting the $43 billion the video game industry generated in revenue last year.
The proposed tariffs add a 25% tax on all imports from China. Microsoft, Nintendo, and Sony say the tariffs “likely put a new video game console out of reach for many American families,” if retail prices for their signature products rise to offset the tax.
Describing a "ripple effect," the three game publishers say that the imposed tariffs increase on consoles will hurt also the smaller software developers they collaborate with. "Our consoles have generated a vast ecosystem of small and medium-sized game developers," the letter says. "A significant number of the games played on Microsoft, Nintendo, and SIE video game consoles are not developed by our companies in-house."
Microsoft, Nintendo, and Sony are among the half a dozen tech companies that have publicly asked the current administration to excuse their products from the raise in tariffs on Chinese goods. In particular, there’s concern over tariffs being placed on popular devices before the 2019 holiday season. The USTR held the hearings on June 17, which means they can go into effect at any time.