There has been a lot (and I mean a lot) of discussion online about President-elect Trump's proposed tariffs and how they might affect the game industry. I even received a few emails asking for my take on the topic in a column.
President-elect Trump loved tariffs (but so did President Joe Biden). During his first term in office, Trump's administration enacted tariffs of 20% to 50% on a wide variety of products. Washing machines, for example, were hit with a 20% tariff on the first 1.2 million imported. After that figure was reached, the tariff increased to 50%. Surprisingly, there was no tariff on dryers, but the price on them went up anyhow as domestic manufacturers took advantage of the fact that customers did not know that to raise the price on them as well.
The games industry actually managed to avoid any impact from tariffs during the first Trump administration by getting its products classified into a category exempted from tariffs on imports from China (see "It’s Beginning to Look a Lot Like Tariffs, Again"). This time around, however, Trump is talking about 10-20% tariffs on most imports, and 60% tariffs on imports from China, which, given the amount of product the hobby games industry produces in China, has a lot of game companies worried.
Assuming the games industry does not manage another exemption to the tariffs, the industry could potentially see an increase in prices, somewhere in the neighborhood of 10% to 40%, with a game with an MSRP of $50 seeing the price go up to about $55 to $70.
Unfortunately, as near as I can tell, the industry has not developed alternative production sources to which it can shift to avoid the most onerous of the projected tariffs, as the Steve Madden shoe company announced it would, moving 50% of its production output from China (which currently accounts for about 70% of its imports into the U.S.) to other factories in Cambodia, Brazil and Mexico. As this indicates, the tariffs are not large enough to cause manufacturers to shift production back to the U.S. or to protect a manufacturing base here, which the gaming industry has only to a very limited degree. All the tariffs will do is cut into profits or, as is more likely, increase prices as game publishers pass them along.
Comments? Am I off base? Send them to castleperilousgames@gmail.com.
The opinions expressed in this column are solely those of the writer, and do not necessarily reflect the views of the editorial staff of ICv2.com.