The negotiations between President Trump and Chinese Vice Premier Liu have resulted in video game consoles including PlayStation 5 and Xbox Series X, evading a potential price hike.
The United States and China found common ground in December which resulted in them signing a “Phase One” trade agreement. This resulted in the suspension of tariffs on video game consoles for the time being.
We predicted that this trade war may impact the gaming community, negatively. Trump administration’s proposed 25 percent tax on electronic devices may have spelled disaster for the gaming community.
This US-China trade war started when President Trump went against the Chinese trade policies during his election campaign in 2016. The US President threatened to increase tariffs by 25 percent on most of the Chinese electronic merchandise which included consoles.
The proposed tariffs could have potentially made the cost of the PlayStation 5 and the Xbox Series X go sky-high.
China already manufactures most of the consoles and imported over 96 percent of these devices to the US in 2018. In reaction, Nintendo was already planning on cutting down it’s manufacturing in China especially for the Switch lite console.
The ESA ( Entertainment Software Association) comprised of the top publishers, were against the proposition by President Trump. Sony, Nintendo, and Microsoft also issued a joint statement when they wrote a letter decrying Trump’s tariffs.
According to them, the increase in price would decrease the availability of video game consoles to many American families. Sony’s CFO Hiroki Totoki had already expressed his concerns about the repercussions of the impending tariffs. The ESA showed unanimity in denouncing the proposed increase in tariffs on electronics devices. The ESA told Polygon:
We are encouraged that the Administration suspended the implementation of tariffs on video game consoles and controllers. These tariffs would have significant implications for our industry, which boasts a trade surplus for the American economy.
While the taxes on PlayStation 5 and Xbox Series X won’t be increased, the increased tariffs are being implemented on tabletop games that are made in China. Needless to say that the publishers took a sigh of relief as the gaming industry has remained unaffected by the US-China trade war.
The ESA stated that it felt “encouraged” by the news. Publishers such as Nintendo and Sony don’t feel the need to shift console production from China for the time being.
The PS5 and Xbox Series X are slated to launch at the end of the year and it may have been a deal-breaker for many people if their favorite consoles suddenly became un-affordable.