Import duties won’t affect consoles, but console manufacturers are still worried

UNITED STATES, WASHINGTON (VOP TODAY NEWS) — Sony, Nintendo and Microsoft were probably relieved to learn that the Trump administration announced today new exceptions to the list of Chinese imports that are expected to levy a 10% tax, according to gmbox.

This list includes a number of game categories, including the PlayStation 4, Xbox One, and Nintendo Switch consoles, which are going to the Celestial Empire.

The introduction of duties on portable computers and monitors for computers, mobile phones, game consoles, some types of toys, clothes and shoes is postponed until December 15. This will save many American consumers, who often give similar products to relatives and friends during the winter holidays.

In addition, the United States completely excluded a separate group of Chinese goods “for reasons of health, safety, national security” and for a number of other reasons.

Earlier, Sony, Nintendo and Microsoft have already made a joint appeal to the US government. They asked to refuse duties on goods from China, where 96% of consoles are produced. After the introduction of new tariffs, game consoles can rise in price by a quarter, which will reduce their sales.

Sony threatened to raise prices for PlayStation consoles in the United States if the American side decides to increase duties on parts used in consoles as part of a trade war with China, The Wall Street Journal reported earlier, citing a statement from the company’s financial director Hiroki Totoki.

Most PlayStation consoles are made by Sony contractors in China. The company has already warned Washington about a possible price increase. Hiroki Totoki, in an interview with the publication, noted that an increase in duties on Chinese electronics products would ultimately hit the United States itself. If this company does decide to raise prices, it’s likely that a lot of people will refuse to purchase a PlayStation for a heightened price. Many people will be able to get around this by using websites like Gamulator. That allows people to play games like final fantasy 7 rom on the computer, instead of on the PlayStation. This ensures that people wouldn’t need to pay these increased prices to play their favorite games.

The video game industry makes a significant contribution to the US economy: total revenue in 2017 amounted to $ 36 billion, and next year rose to $ 43.4 billion, reflecting an increase of more than 20%. More than 220 thousand people are directly and indirectly employed in this industry.

The vast majority of video game companies qualify as small businesses in each of the fifty states; many develop video game software on a variety of platforms, from PCs to mobile devices, including game consoles, and are an integral part of the fast-growing application economy.

Nevertheless, Trump himself for video games does not seem to have much love. Recently, statements by the President of the United States after the shooting in Texas and Ohio hit the capitalization of major video game developers: their stocks crashed by no less than 5%. In particular, according to Bloomberg, Activision Blizzard Inc., Electronic Arts Inc. and Take-Two Interactive Software Inc.

“We must stop the glorification of violence in our society. This also includes the bloody video games that are now commonplace. Today, difficult teenagers need nothing to surround themselves with a culture that extols violence. We must put an end to this or substantially reduce the scale of this. And this (work) should begin immediately, “said Trump.

A stream of criticism hit popular shooters such as Call of Duty and Fortnite. And it scared investors who invested in the gaming industry. Computer game development companies are often harassed by both American parties: they are accused of increasing the number of cases of violence in the States, although the developers themselves do not agree with this statement.

American companies, long accustomed to using China as their global workshop, seek to diversify their production amid increased trade instability. Beijing only exacerbates the situation by exerting pressure on foreign manufacturers.

Announcing the postponement of duties on Chinese laptops and other technology products until December, Donald Trump noted the difficulty of making such long-term manufacturing decisions. At the same time, technology companies are clearly not waiting for an early resolution of the trade confrontation. Taiwanese companies that produce most of the technology are seriously reviewing relations with China.

The trade war threatens to destroy the complex global supply chain that many countries besides China and the United States are involved in. Many components used to manufacture equipment and gadgets are not manufactured in the same USA, despite the fact that they are developed there. A phone chip developed by Apple may leave the factory in Taiwan and then be packaged (a process that prepares it for integration into the circuit) somewhere else before being shipped to China for assembly on the iPhone.

Raising tariffs on Chinese-made goods threatens to destroy their margins and disrupt the supply chain that has been established for decades. Microsoft, Amazon, Sony, and Nintendo are reportedly among those who are currently evaluating the prospects of leaving the line of fire in Southeast Asia and India. According to Bloomberg News, Google Alphabet Inc. has already moved most of its US-based motherboard production to Taiwan.

The news about the transfer of production of Inventec, according to Bloomberg, is one of the most dramatic since Trump announced his decision to set 10% tariffs on imports of Chinese goods in the amount of $ 300 billion. Initially, the list should include consumer gadgets from smartphones to laptops. Many Taiwanese companies working with brands such as Dell Technologies and Nintendo are now developing contingency plans, moving individual assembly operations, or exploring alternatives.

At the same time, analysts expect that the delay in tariffs will not affect these plans.

“Although this announcement appears to provide additional (and market-friendly) information on how the White House approaches trade policy, we don’t think it means a significant change in the US-China dispute,” Goldman Sachs analysts said. “We believe that the United States and China are unlikely to reach a long-term agreement before the 2020 elections, which will ensure certainty regarding tariff rates on imports from China.”
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