The ESA (Entertainment Software Association) is apparently in the early part of the process of planning to deal with a new trade tariff that, should President Trump’s administrations implement it, would become a form of tax on businesses that manufacture goods outside of the United States, according to VG247.
In the lead up to Trump’s election the President’s media team were toying with the idea of a five percent trade tariff, which soon escalated to a ten percent tariff, both of which would greatly impact the sales of consoles.
On January 23rd 2017 President Trump met with business and union leaders after withdrawing from the Trans-Pacific Partnership. The TPP was made up of the countries that border the Pacific Ocean, and aimed to deepen the economic ties with those countries by slashing tariffs, and encouraging economic growth through trade. Without the United States the TPP stands to make barely any impact on trade between the remaining member countries, and the resultant increase in costs will only be passed on to the consumer.
The reason console prices would be affected, should a tariff be imposed, is because many of them, such as the Nintendo Switch, are manufactured outside of the US. The higher the cost to manufacture the console, the more consumers will have to pay, and a ten percent tariff will only serve to drive the, already high, price of the Switch higher.
When asked by Polygon what the impact on video game developers and companies would be should a tariff be imposed, the ESA confirmed they were looking into the issue but had no information as of yet. CNN Money have reported that President Trump wouldn’t need support from Congress for the tariff, as there are several other rules he could use to implement it himself.
While the prospect of a trade tariff is unpleasant to video game fans, it’s even more so for any US business the tariff would affect. Economic experts say that any significant tariff could lead to a trade war, resulting in other countries imposing equally impactful tariffs against US products.Related Topics: Consoles, Donald Trump, Trade tarrifs