Import tax on game consoles from Sony, Microsoft and Nintendo seems to be a thing of the past

Due to the recently concluded trade deal between China and the United States, a 25 percent import duty on consoles from Sony, Microsoft and Nintendo seems to be out of the question. Without that deal, the game consoles would presumably become more expensive for US buyers.

Two weeks ago, the United States and China closed the so-called Phase One Trade Agreement, promising China to buy more US goods and do more to protect US intellectual property. In return, President Trump’s administration decided to lower or not impose certain tariffs on goods made in China. Without this deal, an import tariff of 25 percent would apply to electronics, including game consoles.

The Entertainment Software Association emailed Polygon that the Office of the United States Trade Representative has suspended the proposed tariffs until further notice. According to the ESA, the increased import tariffs would have had significant implications for the gaming industry, including “eroding innovation, fewer US jobs and higher prices for consumers.”

President Trump’s administration may have listened to the concerns of Sony, Microsoft and Nintendo. The three companies wrote a joint letter in June last year expressing their concerns about the proposed import tax on game consoles. In that letter, the console makers indicate that they are selling their devices at cost price or slightly above in order to get players to buy the hardware and make them invest in games. According to the companies, an import duty of 25 percent will irrevocably lead to a higher price for consumers. In total, they would pay $840 million more than usual, the companies say. About 95 percent of consoles sold in the US are assembled in China.

The 25 percent tax will remain in effect on about $250 billion worth of Chinese goods, including the materials needed to make board games. John Stacey of the Game Manufacturers Association tells Polygon that these tariffs are causing many players in the board game industry to consider manufacturing in Europe, Mexico and, to a lesser extent, the US.

The latter is an important objective of the import duties. It is a means of pressure in the trade conflict, which should make it less attractive for companies to have products made in China. Higher tariffs would also be imposed on Apple products in the context of the trade dispute. The Cupertino company previously asked the US government to waive the import tax. The conclusion of the Phase One agreement now means that the proposed 15 percent levy on iPhones, iPads and MacBooks is out of the question for the time being. A previously instituted charge on the Apple Watch and Airpods is still in effect, but it may disappear with a new deal.