For months, Nintendo, the maker of famous video game series like Super Mario Bros. and Donkey Kong, had expected the morning of April 2nd to be a celebration.
For many fanfares, the company has announced the price and release date for the Switch 2, a new video game console for eight years. At an event in New York City, Nintendo’s US President Doug Bowser took to the stage as fans cheered on the arrival of the new game to accompany the console. Mario Kurt, Donkey Kong, Kirby.
That same day, President Trump announced tariffs that piqued the global stock market and put the Mario Party at risk. The new switch took place in Vietnam, one of the countries on the tariff list.
Two days later, Nintendo said it could delay pre-orders for the Switch 2 and raise the price from $450. It was unclear how expensive it was. But on Wednesday, Trump said he has been slowing the expansion of tariffs in Vietnam and many other countries for 90 days. Nintendo has yet to say how delays will affect the price of the Switch 2.
Nintendo’s Whip Saw Experience shows the wider disruption Trump has caused for technology makers and the uncertainty of what the market will look like for consumer technology in the coming months.
In a statement before Trump delayed the expanded tariffs of countries other than China, Nintendo said it plans to release the Switch 2 in June, but did not set a date on whether to resume pre-orders or announce new prices.
Gamers had already taken thousands of people to social media sites like X and Reddit to complain. It is a common practice in the industry for gamers to blame the high costs of corporate greedy consoles and games, but instead they have denounced Trump.
Gamer and Philadelphia writer Jake Steinberg visited New York last week to perform a Switch demonstration.
“People were always saying this modest and they always said, ‘we’re going to keep politics out of the game,’ so the irony is extreme,” Steinberg said. “Well, I’m here.”
For years, Nintendo has been making game consoles in China. However, it moved most of its production to Vietnam during Trump’s first term in 2019, moving into tariffs and the threat of trade war between China and the United States.
These operations appeared to be nothing as Trump’s plans announced last week threatened heavily new tariffs on goods from Vietnam (46%), Japan (24%), Malaysia (24%) and Cambodia (49%).
However, due to the delay announced Wednesday, Nintendo may be one of the lucky ones. The majority of home appliances, including smartphones and other gaming consoles, are still made in China. And they are expected to be subject to a 145% tariff, which is larger than a few days ago. Like most countries, products made in Vietnam still suffer from 10% tariffs.
According to Wedbush Securities analyst Michael Pachter, the delay will increase production and inventory over 90 days, and increase inventory in US inventory. However, for other tech companies like Apple that normally don’t start producing new iPhones until a few months before the release date, that may not be an option.
Nintendo has ended up playing a sensitive game where they decide how much they can raise prices without chasing away gamers who already feel $450 is steep enough, or ultimately, how much they can raise prices without retaining hope that they won’t be hit by the expanded tariffs.
For gaming companies like Nintendo, Sony and Microsoft, selling consoles is just one aspect of their business. If a customer chooses not to purchase a new console, they will not be able to purchase software for the game itself that sells at a higher margin than the hardware.
Pachter added that the cost of consumer tech products could rise all the way, but he added that prices for buzzy items people have been waiting for for years, like the Switch 2, the first console Nintendo released since 2017. He estimated that if the Trump administration proceeded with tariffs, the new costs for Switch 2 could increase by up to $100.
“No one is waiting for a TV to buy on June 5th, so you’re not sure if the TV prices will go up,” Patter said. “They will notice it gradually, but it’s different with the launch of such a product.”
In an interview with news media before Trump’s tariffs were announced, Nintendo’s Bowser said the expected costs of future tariffs were not taken into account at the console’s $450 price. However, analysts are primarily disputing the claim, referring to the $340 price for Switch 2, which is sold in Japan. (Nintendo spokesman said that Japanese models are limited to Japanese, so some are low cost reasons.)
Nintendo will likely wait for the dust to settle down in Trump’s tariff disruption before announcing new prices, said Doug Creutz, an analyst at investment firm Cowen. He added that there is still a possibility that Trump will withdraw from tariffs entirely.
“They don’t need to change prices again,” Krutz said. In the decision, he said he weighed the company: “Are we willing to make less profits in the US? Do you want to protect our profit margins?”
Nintendo has not delayed pre-orders for Switch 2 elsewhere in the world, where costs vary from region to region. $442 in the UK, $435 in Australia and $450 in Canada. Nintendo still does about 30% of its manufacturing industry in China, which it uses to supply non-US buyers, says David Gibson, an analyst at MST Financial.
In the short term, it helps offset some of the costs by the end of February, Nintendo had already shipped 746,000 units of Switch 2 to the US.
“It protects them in a quarter,” he added. “But then the price will be total duties.”
Nintendo is not just a high-tech company that places importance on the trade-off of increasing product prices. Similarly, Apple moved part of its manufacturing industry from China to Vietnam in 2019. Other console manufacturers, such as Sony and Microsoft, will face a similar dilemma when they manufacture their next console, scheduled to be released around 2027.
“We’re going to be attacked by all the big appliance companies, including Samsung, LG, Apple, major TV makers, gaming consoles,” Gibson said. “That’s everything.”
Source: www.nytimes.com
