Microsoft, Nintendo, and Sony Interactive Entertainment has sent a joint letter to the Trump administration asking that it reconsider imposing tariffs on China, specifically for video game hardware. The three companies say that these tariffs could cause "disproportionate harm" to the video game industry and put many "high-value" U.S. jobs at risk.
The general counsel from each of the three companies, Microsoft, Nintendo, and Sony sent a seven-page letter to Joseph Barloon, general counsel to the Office of the United States Trade Representative. In it, the companies detail both the innovations and benefits of the video game industry to the U.S. economy, and how it could be harmed by the tariffs on China.
"While we appreciate the Administration's efforts to protect U.S. intellectual property and preserve U.S. high-tech leadership, the disproportionate harm caused by these tariffs to U.S. consumers and business will undermine—not advanced—these goals.
The letter specifically states that the tariffs will "injure consumers, video game developers, retailers and console manufacturers; put thousands of high-value, rewarding U.S. jobs at risk; and stifle innovation in our industry and beyond."
According to the letter, in 2018 over 96% of video game consoles imported into the United States were made in China. And that because of the complex supply chains for video game consoles, the tariffs would create significant disruption to "shift sourcing entirely to the United States or a third country."
Furthermore, the tariffs "would increase costs—even beyond the cost of the proposed tariffs—on products that are already manufactured under tight margin conditions." The three game companies argue that these tariffs could even lead to a depression in sales for video game consoles.
The tariffs couldn't be coming at a worse time for the video game console market. Both Microsoft and Sony are prepping to launch new consoles, the PS5 and Project Scarlett, sometime in 2020. Meanwhile Nintendo has been reported to move manufacture of the new Switch models outside of China to avoid the tariffs altogether.
However, the Trump administration has been making aggressive trade moves towards China this past year. The decision has already caused Huawei devices from being sold in the United States. So it's unclear if the letter from Microsoft, Nintendo, and Sony will push the Trump administration to reconsider.