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Trump Administration Planning 25% Game Console Tariff as Part of China Trade War

Console Tariffs Trade War

The US government's costly trade war with China is rumored to be opening a few new fronts, including a tariff on video game consoles. Outside of violence in gaming and loot box regulation, it's seldom that politics and gaming directly mix, and many gamers that otherwise consider themselves apolitical are right to be up in arms over this potential attack on their past-time.

This news is concerning because each of the big three in the gaming hardware industry heavily rely on Taiwanese labor to manufacture their consoles. Specifically, Sony, Microsoft, and Nintendo all do business with Taiwan hardware manufacturer Foxconn, the largest electronics producer in the world. Due to Taiwan's long and complicated history with mainland China, its economy is incredibly dependent upon Chinese imports of Taiwanese goods, meaning that the game console business is inextricably linked to China's economic activity. Though Western consumers are more accustomed to poking fun at Chinese entertainment products for their shameless copyright infringement and strict governmental censorship, American gamers will now have to point the finger at their own government if gaming suddenly becomes a lot more expensive stateside.

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As reported by GameDaily.biz, the Office of the United States Trade Representative has published a document detailing what goods may be jacked up in price by 25 percent through potential future US tariffs aimed at China, and game consoles and coin-op arcade cabinets are on the exhaustively long list. The threat of this tariff being levied is very real, with AMD and Nvidia graphics cards having already been hit with 10 percent tariffs. Gaming industry lobby Entertainment Software Agency (ESA) explained the likely economic effects of this proposed tariff simply when stating, "The video game industry boasts a trade surplus for the American economy. Tariffs will hurt the American economy, its industries, and its consumers.”

It's not just the ESA that feels this way about the Trump administration's trade vendetta against China, as countless economists and analysts across the nation have documented the disastrous effects of these tariffs on the American economy and warn against implementing the ineffective practice any further. The White House and its supporters are under the impression that the added cost will somehow cripple sectors of the Chinese economy and hold their head under water before the growing nation can overtake the US as the world's economic superpower. However, the fact of the matter is that China simply passes on the additional costs incurred from tariffs onto American importers, who in turn squeeze American retailers and consumers to make up for price hikes. With the next console generation on the horizon, US gaming enthusiasts will likely get a first-hand demonstration of exactly how tariffs works if their government gets its way.

Worse than a lose-lose situation, the only ones who will suffer from a tariff on consoles and other Chinese goods will be American consumers. In fact, China doesn't feel any of the intended negative impact of tariffs, meanwhile American citizens and businesses are punished because of a willful lack of economic understanding on the part of the Trump administration. If the US truly wants to continue to compete with China, its immediate objectives should be to revitalize its own manufacturing industry by disincentivizing domestic companies from outsourcing cheap Chinese labor in lieu of paying American workers. If it's not willing to do that, the US ought to simply buckle in and get ready to play second fiddle to China with grace, but tariffs have no rational place in either scenario.

Next: China Will Have More PC Players Than the US Has People by 2023

Source: GameDaily.biz

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