Update: After publishing, the ESA provided Inverse with the following updated statement:
“Video games are one of the most popular and beloved forms of entertainment for Americans of all ages. Tariffs on video game devices and related products would negatively impact hundreds of millions of Americans and would harm the industry’s significant contributions to the U.S. economy. We look forward to working with the Administration and Congress to find ways to sustain the economic growth supported by our sector."
Original article:
Ahead of President Donald Trump’s imposed tariffs on Canada, Mexico, and China, the Entertainment Software Association has released a statement on the negative effect they could have on the video games industry.
You might know the ESA as the company that used to run the massive gaming convention E3, which was officially discontinued in 2023. Beyond that, the ESA is a trade association established to expand and protect and expand the video game industry at large — and various large publishers are members of the group, including Capcom, Electronic Arts, Nintendo, Sony Interactive Entertainment, and more.
With the tariffs set to officially go into place on February 4, 2025, the ESA released a statement to Kotaku, asking the Trump administration to “consult” with companies before they cause “considerable harm.”
“Tariffs on video game devices and related products would impact Americans of all ages across the country,” says the ESA, “We urge the administration to console with the private sector in a transparent process to avoid causing significant harm to everyday Americans and to one of the fastest growing entertainment sectors in the United States.”
The ESA has been pretty quiet since the days of E3.
There have been countless reports about how the new tariffs could affect the United State’s economy, surging everything from food prices to housing construction. Video games are no exception, and the costs specifically for physical products could go up — largely meaning consoles and physical games.
For some context, tariffs are an import tax, typically charged as a percentage of the prices a buyer pays on a foreign seller. Tariffs can vary wildly based on what product you’re talking about, and whether there’s a trade agreement in place. Up until now, there has been a US-Mexico-Canada trade agreement, so goods could more freely between the three countries. But largely tariffs work as a revenue generator for the White House — companies pay a higher fee on imported goods, and that fee then gets passed onto consumers by way of raised prices on products. Even Senator Mitch McConnell told 60 Minutes in a recent interview that tariffs would be paid for by the American consumers.
That’s exactly how we’d see the prices of video game products raised, even if it’s not on the direct goods. Tariffs on things like semiconductors or parts would mean console manufacturers have to spend more to actually make the systems, thus raising prices for the systems themselves.
As reported by Kotaku in November 2024, the Consumer Technology Association (CTA) released a report, claiming that roughly 40 percent of the costs of tariffs would be passed onto consumers in regards to video game consoles and related products.
“American consumers would pay $7 billion more for video game consoles.” The report goes onto forecast that US consumers would reduce overall purchases by 57 percent.
This could be a big hit for consoles in the middle of their lifespan, like the PS5 and Xbox Series X|S — not to mention the potential impact on GPU makers like Nvidia. It also could undoubtedly have an affect on the launch of the Nintendo Switch 2. But there are multiple factors to consider here.
It would all largely depend on where things are produced, or where the goods to produce them come from. David Gibson, Senior Analyst at MST Financial, notes that after Trump’s first term Nintendo decided to try and shift its production line, so that 50 percent of its production came from Vietnam.
If Nintendo got on production of the Switch 2 early, it’s possible its production from Vietnam alone could sustain the system’s launch in the United States — meaning it wouldn’t have to raise the price of the system from the original planned price point. But so much of the situation is fluid and changing almost daily.
Trump initially announced 25 percent tariffs on Canada and Mexico, and 10 percent on China. But now, Trump has said the tariffs from Mexico are paused for one month. Those tariffs on Mexico could hit gaming particularly hard, as the country is a major manufacturer of physical discs.
When Trump initially talked about tariffs in November 2024, video game analyst Mat Piscatella commented by saying “If new physical video games are hit with an import tax which prompts an increase in their price to consumers, the most likely scenario would be the price of digital games would be raised to be at parity.”
That would mean video game prices across the board could go up, or in a worst-case scenario Piscatella notes “the alternative would be to abandon physical.” The industry has already been trending toward digital distribution for years, but the complete erasure of physical games would be an incalculable blow for both the collecting scene and the preservation of games.
The gaming industry is already in a precarious position, with the cost of game development surging and rampant layoffs. Big games, like Concord, simply can’t afford to fail.
Perhaps the most worrying aspect about all of this, however, is the fact that the video game industry already hangs at a dangerous precipice. The last two years have seen dozens of studios closed, and huge costly games, like Concord and Suicide Squad, fail. Over 20,000 workers have been laid off in the last two years — so many layoffs that a GDC survey in 2024 found that 1 in 10 game developers had been laid off last year. That’s a genuinely staggering number.
Even without help, it’s possible the video game industry could be headed for some kind of slump. Tariffs surging prices, leading to less consumer spending, could be the straw that breaks the camel’s back for an industry that’s already in a downward spiral.
