Sony has said that it may need to increase the retail price of PlayStation products in the United States if the Trump administration chooses to impose further tariffs on China. The two countries have been locked in a trade war for months, and the economic conflict has worsened as the U.S. only increases its tariffs on Chinese goods.
The Trump administration initially hit China with a 10 percent increase in tariffs on $200 billion worth of Chinese exports. In May, that number was raised to 25 percent. Responding to the administration's plans to add tariffs including game consoles, Sony, Microsoft and Nintendo submitted a joint letter to the U.S. trade representative's office in protest. The U.S. and China will resume negotiations this week in another attempt to resolve the dispute, but the Trump administration has threatened to place the 25 percent tariff on an additional $300 billion of Chinese exports if negotiations with China collapse again.
The Wall Street Journal reports that these new tariffs would include PlayStation consoles, and that Sony has once again voiced its opposition to the idea. "We believe, and therefore have told the U.S. government, that higher tariffs would ultimately damage the U.S. economy," Sony chief financial officer Hiroki Totoki said in a statement. He went on to say that Sony isn't sure how it would respond to another increase in tariffs, but the company is weighing its options - which could include placing part of the burden on consumers.
As is also the case with Nintendo and Microsoft, Sony relies on contract manufacturers in China to produce the majority of PlayStation hardware. The PlayStation brand is still the largest and most profitable part of Sony's business, but the company stated that profit for the April-June quarter fell 33 percent from last year, down to about $1.4 billion. Sales of the PS4 have also gone down, and Sony has cut its sales projection for the year ending March 2020 by one million units, down to 15 million units.
With the company already in an uncomfortable spot financially, an expansion of tariffs would almost surely end up hurting Sony's consumers. Nobody is benefiting from this trade war, and it will only drag on for longer if the Trump administration decides to slap China with more unnecessary tariffs. Sony is also hard at work on the PlayStation 5, which we may as soon as 2020. The company has previously said the the PS5 would include some more expensive technologies, and more tariffs would just inflate the cost of the new console once it hits the market.
Source: The Wall Street Journal