Economic and business leaders have been swiftly adapting to President Donald Trump’s tariffs, making it difficult for Americans to anticipate how their lifestyle might change under Trump’s economic policies. One area that has been overlooked is the impact on the video game industry. A large portion of the population, about two-thirds, plays video games for at least an hour per week, and nearly 80 percent of U.S. households own a gaming device. Contrary to common belief, the average gamer is 36 years old. However, broad tariffs, such as the 10 percent tax imposed on China by the Trump administration, could lead to a significant price increase of 40 percent for consoles and a 57 percent decrease in purchases.
The repercussions extend beyond just access to video games for consumers. Declining console sales could affect over 350,000 American jobs, around $66 billion in the country’s GDP, and substantial tax revenue for federal and local governments. Fortunately, some companies in the industry have taken proactive measures in anticipation of a second Trump administration. For example, Nintendo had planned to relocate production of its Switch gaming consoles to Vietnam in 2019 to avoid trade tensions with China. Additionally, Microsoft has been diversifying its manufacturing operations beyond China for several years.
Despite efforts to mitigate the impact, tariffs on gaming hardware will still have adverse effects, particularly considering that consoles are already sold at a loss. For instance, Microsoft reportedly incurs a loss of nearly $200 on each Xbox sold. To offset losses, companies rely on other revenue streams such as subscriptions and digital content, which are less susceptible to tariffs. This is good news for software sector jobs that make up a significant portion of the video game industry in the U.S.
Although exemptions or delays from the White House may provide temporary relief, the imposition of tariffs could result in gaming becoming an expensive luxury that many Americans cannot afford. It is essential to consider the broader implications of such measures, especially given that gaming is a popular pastime for a majority of the population. Trump should exercise caution in interfering with the market to prevent detrimental consequences.
