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This week, the United States released a paper outlining an amendment to a plan of action that would increase taxes on goods imported from China up to 25%. Among the items listed in the proposed Chinese imports are game consoles and controllers which, although designed by companies in the United States and Japan, are actually manufactured and imported from China.
At present, this document is a request for a hearing in which the United States Government will hear comments on this proposed tax increase. There is no doubt that many companies will have a lot to say about this and will try to remove some items from the list. Neither Microsoft nor Sony commented on the document, but both companies are likely to oppose the console and controller fee.
For those who may not know, the PS4 is manufactured by Foxconn Technology Group, based in New Taipei. And coincidentally, Foxconn also manufactures the Xbox One, although both consoles are competing.
Microsoft and Sony are expected to launch new consoles in the next 18 months, and these companies are likely to start manufacturing deals. But if this tax is passed or if it seems to be, they may want to consider manufacturing factories elsewhere. Originally, Microsoft manufactured the first Xbox in Mexico, which could be an option, but this proposal may generate a lot of scrambling with secondary options.
A 25% charge on the consoles would likely have a significant impact on the price of the PS5 and the next Xbox, which could already be expensive. Sony said the price of the PS5 would be "attractive", suggesting that it would not be as expensive as the PS3 at launch and more in line with current console trends. However, if the company has to cover a 25% tax on imports from China, the supplement could be important.
In the end, this is just a request for a hearing and may not succeed if the proposal is rejected. But this is news that deserves to be followed as discussions around new consoles multiply and questions about prices arise.
Source: USTR.gov
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