Tariffs imposed by Trump may hasten decline of physical games, experts say.

With Donald Trump's second presidency looming, there are concerns about how it could potentially impact the gaming industry and the way we consume games. One of the main concerns is the potential tariffs that could be imposed on Chinese exports, which could lead to increased costs for video game consoles in the US. While Trump won't officially be inaugurated until January 20, his policies have already sparked worry within the games industry.

Trump has previously stated his intention to impose a 60% tariff on all Chinese exports in an effort to promote American-made goods. This could result in a 40% price hike for video game consoles in the US, as most of their hardware components are manufactured in China. While there have been reports that the baseline tariff may be revised down to 35%, it is still uncertain if any tariffs will be implemented. However, business experts have suggested that if they do go into effect, it could accelerate the shift towards digital games and streaming.

In a newsletter by Joost van Dreunen, a business professor at NYU Stern School of Business, he proposes that the worst-case scenario of a 60% tariff could lead to a major restructuring of the US console market and potentially decrease sales to levels not seen since the early 2000s. This is despite the fact that the gaming population has significantly grown over the past two decades. He also suggests that this could drive the industry towards new distribution channels and monetization strategies, such as cloud gaming and streaming services.

According to Dreunen, "By potentially raising console prices, Trump's trade policies create immediate pressure to find hardware-independent delivery methods. Just as the 1983 crash and 2008 recession catalyzed new distribution models, these tariffs could fast-track the industry's shift toward cloud gaming, streaming services, and transmedia distribution, marking a classic transition from content innovation to distribution innovation in the pendulum cycle."

While it is unclear if these tariffs will also affect the prices of physical games, industry analyst Mat Piscatella has speculated that if they do, the price of digital games could also increase in response. He suggests that if the price of physical games goes up due to tariffs, the most likely scenario would be for the price of digital games to also increase or for companies to abandon physical games altogether. This could potentially benefit Microsoft, as they are already pushing their Game Pass subscription service on multiple platforms and trying to distance themselves from a single console.

However, this shift towards digital gaming may not be feasible for everyone, particularly those living in rural areas with slower and less reliable internet services. This brings up the question of whether the potential tariffs will have a significant impact on the next generation of consoles, which are expected to be announced in the next few years. It is possible that a price increase for consoles could lead to more people purchasing the all-digital model or convince companies to stop producing consoles with physical hard drives altogether.

The outcome of all this depends on whether or not Trump's proposed tariffs are implemented without exemptions. While it is likely that major video game companies will try to protest these additional charges, Trump's sweeping win in all three branches of the US government means that his policies may face less resistance. While these tariffs will primarily affect the US market, it is possible that companies may raise prices globally to make up the difference and ensure that US customers do not feel like they are paying more.

With the potential for increased costs for physical games and consoles, there may be a rise in the popularity of all-digital gaming. This could lead to a future where physical copies of games are no longer the norm. However, this is all speculation at this point and only time will tell how Trump's policies will truly impact the gaming industry. In the meantime, stay updated by subscribing to our newsletter and following us on social media. We also welcome your thoughts and opinions through email and in the comments section below. And for easier submission of letters and features, check out our Submit Stuff page.

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