Microsoft, Nintendo & Sony collaborate to warn US government about China trade tariff’s effects on gaming

Authored by mspoweruser.com and submitted by 12thedata12

Microsoft, Nintendo and Sony have collaborated to warn the United States government about the effects that the recent China trade tariff will have on the production of video games consoles.

In a seven-page letter to the Office of the United States Trade Representative, a representative from each of the three big console manufacturers put in their word regarding the recent sanctions. Writing to General Counsel Joseph L. Barloon, the document explains, in detail, the problems that console manufacturers face.

The document focuses on not only the harm that the proposed tariffs would have on small and medium-sized software developers across the US, but also how it would hinder the future development of technology. In regards to console gaming, the trio notes that console hardware is highly specialised with complex supply chains.

“Unlike PCs, each of our consoles has a custom hardware configuration and design and offers unique and differentiating features that run on proprietary software operating systems connected to each company’s unique platform and services,” the three wrote. “Games and services designed for one console must be re-engineered—through a labour-intensive process known as “porting”—to operate on another console or on a PC, at significant cost to the video game publisher.”

With companies like Nintendo already pulling out of China for fear of the US’ trade sanctions, it’s no wonder that both Sony and Microsoft are also worried. The three note that removing their production lines outside of Chinese territories would result in a price hike of 25%, eliminating the appearance of new console hardware from many American homes, therefore harming the income of American countries.

Of course, this is all delegated to the harm of American companies. Chinese hardware developers like Huawei are already feeling the brunt of the US’ threats. With FedEx suing the American government over the tariff threat and letters like this, will the US distance themselves from the trade ban?

WutheringBytes on June 26th, 2019 at 16:54 UTC »

Background in finance+economics here:

Historically China puts larges tariffs on stuff the US sends them but the US doesn't put huge tariffs on stuff they send the US. This makes it difficult for US manufactured goods to be sold for a profit in China but very easy for Chinese manufactured goods to be sold for a profit in the US. In addition China also manipulates their currency and steals US intellectual property-reverse engineering and selling bootleg products. This is objectively a bad deal for the US-nobody should disagree. China refuses to change the deal in place as it would not benefit them.

Trump's strategy has been to threaten tariffs on China as a negotiating tactic. It is a game of chicken. China has retaliated by raising US tariffs in turn. Trump is wagering that because China's economy is dependent on exporting goods to the US the tariffs will hurt China more than they will hurt people in the US. The idea is short term pain here in the US will end up paying off when China is forced to come back to the table and agree to a more "fair" deal.

China and the US had a deal they were ready to work out after months of back and forth with tariff threats. When negotiations were getting close to a resolution China changed their mind. Trump has responded by raising tariffs.

Objectively China has done the US wrong with tariffs in the past-they also have human rights concerns with labor, currency manipulation, IP theft, and corporate espionage on their rap sheet. The subjective part is whether or not you agree with Trump's strategy.

Edit-Want to add that I don’t want to pay more for consoles-I own all 3 now so upgrading would be expensive. I do want to see the trade dispute resolved. I am also thinking we will see a shift with production moving to other low cost countries. Would be a win for those countries and a loss for China. Believe Foxconn/Apple and others are exploring that idea.

Edit 2-Thanks for the gold and silver! Hope everyone has a good day!

Edit 3-tons of replies, trying to get to all of the ones that merit a response. Happy to have discussion. Shout out to the one guy who called me a nazi and the other guy who called me low IQ. If I don't get back to you today give me a ping tomorrow and I'll try to get around to it. Again, want to stress that I'm not here to tell you whether or not this is the right way to solve the issue with China but rather what the strategy is-like I said above the subjective part is whether or not its the right one-I want you to read and form your own opinions. Also will use this as an opportunity to plug two books on protectionism (and why its bad) and how trade creates wealth. "The Choice" by Russell Roberts and "The Travels of a T-Shirt in the Global Economy" Pietra Rivoli-two really easy reads for someone interested in this subject.

Lego349 on June 26th, 2019 at 16:47 UTC »

And that’s the only collaboration Sony will be doing with Xbox and Nintendo this year.

SodaPop6548 on June 26th, 2019 at 14:43 UTC »

It's gonna suck if the cost of consoles becomes insane.