United States President Donald Trump has restated his plans to implement a new round of tariffs on trade with China that will significantly impact the electronics market, including video game consoles. The tariff would levy a 10 percent tax on $300 billion in Chinese imports, which Trump is threatening to begin starting September 1 barring a new trade deal agreed upon by the two nations. Trump has already imposed a 25% tariff on another $250 billion in Chinese goods.
Unless there is a last-minute change, it looks like the new round of tariffs is certain to go in effect September 1. The two countries recently wrapped up trade deal talks in Shanghai, but it's been reported that no ground was made between their positions. The next meeting between the two is scheduled to take place in September, after Trump's spoken deadline. However, Trump has at times changed his mind regarding policy before it goes into effect.
The deadline comes soon after the United States Federal Reserve decided to cut interest rates, citing an intent to maintain a favorable outlook despite growing tension between the Trump administration and China. The Fed had been wary to cut interest rates prior, given how Trump vocal pursuance of such cuts as stated on social media.
In June, over 300 witnesses - largely representatives of various companies and industries within the United States - spoke about the effects that the Trump tariffs were having on business. But so far criticisms and requests for an end to the tariffs have gone unheard. Sony's chief financial officer Hiroki Totoki is one such voice of criticism, who says that "higher tariffs would ultimately damage the U.S. economy." Price increases on Sony's PlayStation hardware, as well as other video game consoles that are produced in China, are expected if the tariffs go through.
While Sony's willing to speak publically about the costs of Trump's tariffs, others are taking more drastic measures. In early June, Nintendo reportedly shifted production of its Nintendo Switch outside of China. The move came as Nintendo was ramping up production of the Nintendo Switch Lite, which hadn't been announced at the time. Production was shifted from China to Southeast Asia, which hasn't been targeted by the Trump administration yet. Other companies, including Apple's iPhone manufacturer Foxconn, have made similar moves.
The risk for video game hardware producers, as well as for video game console purchasers, is that prices will increase in line with Trump's tariffs. The next generation of video game consoles being planned for release around late 2020, with expected prices between $400-$600. Those consoles could potentially see a price increase of $50-100 as a result.