Consoles Could Get Taxed 25% Under Government Tariffs

Consoles Could Get Taxed 25% Under Government Tariffs

This week, the United States published a document that outlines a modification to an action plan that would raise taxes on goods imported from China by up to 25%. Among the items listed on the proposed Chinese imports are game consoles and controllers, which despite being designed by companies in the United States and Japan are actually manufactured and imported from China.

At present, this document is a request for hearing wherein the US Government will listen to comments about this proposed tax increase. No doubt plenty of businesses will have plenty to say about it and will attempt to remove certain items from the list. Neither Microsoft nor Sony has commented on the document, but both companies are likely to be against the tax on consoles and controllers.

For those that may not know, the PS4 is manufactured by Foxconn Technology Group, which is based out of New Taipei. And coincidentally, Foxconn also manufactures the Xbox One, despite the two consoles being competitors.

Both Microsoft and Sony are expected to release new consoles within the next 18 months or so, and presumably those companies are beginning to work out deals for manufacturing. But if this tax does go through or it seems like it will go through, they may want to consider manufacturing plants elsewhere. Microsoft originally manufactured the first Xbox in Mexico so that could be an option, but this proposal is likely leading to a lot of scrambling with secondary options.

A 25% tax on consoles would presumably greatly impact the price of the PS5 and the next Xbox, which could be expensive machines already. Sony has said that the PS5 price will be “appealing,” suggesting that it won’t be as expensive as the PS3 at launch and more in line with current console trends. However, if the company needs to cover a 25% tax on import from China, the markup could be significant.

Ultimately, this is just a request for hearing and could end up turning into nothing if the proposal is rejected. But it’s a piece of news worth following as discussions around new consoles ramp up and questions over price arise.

Source: USTR.gov


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