The ongoing trade war between the United States of America and China is causing concern for two of our favourite console brands. The Nikkei Asian Review report that Sony and Microsoft, along with PC manufacturers Lenovo Acer and Asustek, and tech giants Google, Apple, and Amazon, are all making plans to shift some of their production out of china.
It is thought that Nintendo have already moved some some production out to Taiwan, specifically that of a new two new versions of the Switch, a cut down model which will be sold at a lower price, and a slightly more powerful version.
“Tech companies’ plans, spurred by the bitter trade battle between Washington and Beijing, have not changed despite the truce that was struck between U.S. President Donald Trump and Chinese President Xi Jinping at last weekend’s Group of 20 summit in Osaka,” report Nikkei. “Multiple sources said the situation was still too uncertain, while rising costs in China were also prompting manufacturers to examine alternatives.”
Economists at Bank of America Merrill Lynch have said the dispute between the U.S. and China is “unlikely to end anytime soon”.
“We think [the trade war] is going to be the big story of the next year, just as it was the big story of the last year,” said than Harris, BoAML’s head of global economics in a media briefing, adding that the current ease in tensions between President Trump and Chinese President Xi Jinping is just “the eye of the storm.”
If the trade war does continue way in to next year as predicted then that is a big problem for Sony and Microsoft as it predicted they will launch their new consoles next year. The powerful machines are going to be expensive to begin with, they can’t afford the price to increased by another 25% thanks to Trump’s tariffs and they have already joined forces with Nintendo to raise their concerns to the current administration.
Why this many not seem to be a concern for those outside of the United States, any disruption to manufacturing chains can cause delays and cost money, and that cost is always fed back to the consumer so although we are not directly affected by the spat, we could be indirectly affected, for example the launch of the new consoles could be delayed or they might cost slightly more worldwide to offset the problem in the United States.
The effect of the huge tariffs should be of interest to our readers in the UK, if the United Kingdom crashes out of Europe with no deal on October 31st then we incur the maximum tariffs on all goods under WTO rules.