The ongoing trade war between the United States of America and China is particularly bad for the technology sector as most tech is made by Chinese manufacturing plants. Although there are currently no tariffs on consoles, they have been threatened by President Trump and Sony have said this will mean the price of PlayStation consoles in the United States will rise.
If the tariffs are implemented, and at present that seems quite likely, then Sony will have to decide who is going to pay the extra 25% tariff on each console. Here’s a hint: It’s almost certainly not going to be Sony.
Sony finance chief Hiroki Totoki has told the Wall Street Journal that “Sony hadn’t decided how it would respond to an expansion of tariffs, but was studying its options, including asking consumers to bear part of the burden.”
“We believe, and therefore have told the U.S. government, that higher tariffs would ultimately damage the U.S. economy,” added Hiroki Totoki.
Last month Sony, Nintendo and Microsoft teamed up to deliver a joint statement to President Trump.
In 2018, over 96% of video game consoles imported into the United States were made in China.
The video game console supply chain has developed in China over many years of investment by our companies and our partners. It would cause significant supply chain disruption to shift sourcing entirely to the United States or a third country, and it would increase costs—even beyond the cost of the proposed tariffs—on products that are already manufactured under tight margin conditions. Each video game console comprises dozens of complex components sourced from multiple countries. A change in even a single supplier must be vetted carefully to mitigate risks of product quality, unreliability and consumer safety issues. Tariffs would significantly disrupt our companies’ businesses and add significant costs that would depress sales of video game consoles and the games and services that drive the profitability of this market segment.
A price increase of 25% will likely put a new video game console out of reach for many American families who we expect to be in the market for a console this holiday season
Since then Sony and Nintendo have confirmed they are shifting some production away from China and in to Vietnam, but moving entire production lines is costly and time consuming, and the tech giants have to find manufacturers who can create their goods to the highest quality.
Trade talks have just resumed this morning in Shanghai and to help things along Donald has been giving the Chinese advice via Twitter.
..My team is negotiating with them now, but they always change the deal in the end to their benefit. They should probably wait out our Election to see if we get one of the Democrat stiffs like Sleepy Joe. Then they could make a GREAT deal, like in past 30 years, and continue
— Donald J. Trump (@realDonaldTrump) July 30, 2019
State broadcaster CCTV commented “Some people in the US should do the job of building up the foundation [for talks] instead of demolishing it,” whilst the state run newspaper People’s Daily added “If you want to talk to China, be honest and sincere and don’t make trouble.”