With the Trump administration’s “Liberation Day” tariffs, the United States hopes to address unfair trade practices. Their implementation, however, has players in the global video game industry scrambling to compete.
In early April, President Donald Trump announced sweeping tariffs in part of his greater protectionist economic policy. Included was a baseline 10 percent tariff on nearly all imports, with major manufacturing hubs for gaming hardware such as China, Vietnam, and Japan now facing rates of up to 145 percent, 34 percent, and 24 percent, respectively.
As Asian suppliers exported $23.6 billion or 75.5 percent of the global total of video games in 2023, the international video game market is bracing for impact. So far, the shocks have prompted adjustments from video game companies and outcries from fans. As the largest entertainment sector, millions of customers would feel any downturn in the international video game market. The Trump administration must calibrate its approach to ensure it isn’t game over.
An immediate case study of video game tariffs arose this month with Nintendo’s reveal of the Nintendo Switch 2. Announced on April 2 with a hefty $450 price tag — $150 more than the original Nintendo Switch — coupled with its launch title, “Mario Kart World” ($80), Nintendo devotees erupted on social media, launching coordinated campaigns to pressure the Japan-based juggernaut to lower the console price. Bill Trinen, Nintendo of America’s Vice President of Product and Player Experience, defended their change in business model:
I would say it’s less about the strategy of pricing… whenever we look at a given [product], we just look at what is the experience, and what’s the content, and what’s the value?
The Trump tariff announcement followed a few hours later. Bloomberg reported that about one-third of all Switch 2 systems are assembled in Vietnam, and more than 90 percent of Nintendo’s console production went towards the US in February. Despite stockpiling, Nintendo delayed Switch 2 pre-orders by weeks to assess the tariff impact and gauge a price hike. They opted to make Switch 2 accessories more expensive as an offset, but the message was clear: premiums are here, whether buyers like them or not.
Customers purchase video games because of their mass affordability, product and service quality, and entertainment value. If public policy makes any of those attributes harder to accomplish, the industry at large loses its allure. For instance, 45 percent of adult players say video games offer the most bang for their buck ahead of other alternatives. But a 2025 study commissioned by the Consumer Technology Association found that broad tariffs would result in a 40 percent price increase for consoles, leading to a 57 percent decrease in console purchases.
If Nintendo’s variable pricing is the new and normalized response, the tactics push consoles out of reach for American families. Per capita disposable income dipped by nine percent during the Biden administration, rendering the average household worse off to withstand economic turbulence. One hundred and ninety million Americans — or 61 percent of the national population — play video games weekly, with 30 percent of the Silent Generation, aged 78 and older, and 72 percent of all parents participating in the fun. If heavy tariffs are sustained, consumer behavior would dramatically contract and lessen the arena’s dynamism.
Note that digital video game software is mostly insulated from tariffs since physical goods or cross-border shipping are not required. Even so, 64 percent of console consumers prefer hard copies of their games. Getting consumers to migrate to a less desirable format is difficult, especially when cartridges or discs do not infringe on console storage or impose unnecessary download times. This is handy for new and beefier triple-AAA titles that dominate the landscape today.
Yet, Mat Piscatella, executive games director at Circana, predicts a drop in demand for upcoming big-name video games due to tariffs and evergreen titles like Fortnite and Roblox, which account for 27 percent of all playtime. Consumer choice exists, but is dampened when the current market environment leaves little room for new avant-garde ideas to succeed.
Whatever revenue tariffs may raise cannot offset the damage. If the administration seeks to boost the video game industry and customers’ standing simultaneously, they must embrace the free market.
Under current trade classifications, video game consoles are listed as “toys,” not technology. As Trump has made tariff exemptions for smartphones, computers, and other electronic devices, the administration can reclassify video game consoles to make them eligible for tariff relief. Doing so can streamline the trade apparatus and deter game manufacturers from inflating costs, particularly with unpopular variable pricing.
Consumer tax credits can additionally be rolled out to combat increased prices and boost domestic demand. Most current US tax credits target game developers with R&D credits or production incentives, but empowering buyers can generate economic activity and complement supply-side incentives for a balanced market. It is a homegrown approach that will expand the 1.8 million jobs spurred by the gaming industry since 2018 and surpass the $66 billion it contributes to the US economy.
Tariffs are not the final boss for the video game industry; it’s just another level to beat. If recent economic headwinds and Nintendo’s Switch 2 reveal are any indication, different principles are needed to stabilize and keep the gaming industry thriving.
