n Nintendo enthusiasts across the United States are breathing a sigh of relief as they unwrap their packages containing the new Nintendo Switch 2 gaming console. This comes amidst unresolved trade tariffs implemented during Donald Trump’s administration. Nintendo’s pre-order delays indicated that a May launch seemed more aspirational than guaranteed. The anticipated price initially soared to $450, but the worst fears of consumers did not materialize.
Nevertheless, Nintendo’s battle against Trump’s tariffs isn’t over yet. The Japanese gaming titan managed to introduce the device just before a 90-day tariff suspension issued by the former president. However, if tariffs in regions like India and Japan revert to those proposed during Trump’s “liberation day” speech earlier in April, analysts suggest Nintendo may have to navigate another fraught trade landscape.
The price of the Switch 2 during the holiday season could exceed that of its launch. Competing gaming hardware brands, and virtually all other electronics firms shipping to the U.S., are closely monitoring the Switch 2 narrative.
“What saved Nintendo in this instance was when Trump caved,” stated Robert Johnson, Professor at Notre Dame and International Economist.
Vietnam’s tariffs forced Nintendo to adapt
Since its debut in March 2017, the Switch has become one of the top-selling gaming consoles of all time, with over 150 million units sold globally. Nintendo unveiled its successor in January, providing full details during a livestream on April 2nd, announcing a release date of June 5th at $450 in the U.S. (Or $500 when bundled with Mario Kart World). Just hours later, Trump addressed the nation, announcing new tariffs on imports from countries with trade deficits with the U.S.
Among these tariffs is a 24% levy from Japan, where Nintendo is headquartered, and a 46% tariff from Vietnam, where much of the Switch’s manufacturing takes place. Stock market fluctuations left Nintendo fans wondering if these abrupt tariffs would increase costs for consumers.
U.S. pre-orders for the Switch 2 were initially set to start on April 9th, but Nintendo postponed to “evaluate the potential effects of tariffs and market developments.” The release date of June 5th remained unchanged. Gamers expressed their frustrations on social media, targeting much of their anger towards the Trump administration rather than Nintendo. Pre-orders resumed on April 24th, with units selling out in no time.
Nintendo has not provided immediate comments on the situation.
Saved by ‘tacos’ after preparing for the wrong tariffs
Johnson remarked, like many home appliance manufacturers, “Where is the production happening?”
In 2019, near the end of Trump’s first administration, gaming companies began relocating production for the Switch from China to Vietnam to avoid U.S. tariffs on Chinese goods. While Nintendo still produces some Switch items in China, these units are generally directed to non-U.S. markets. Other prominent tech firms like Apple have similarly shifted manufacturing away from China to nations such as India to diminish tariff impacts.
This strategy became contentious when the current administration announced a 46% tariff on imports from Vietnam, catching virtually everyone off guard, according to Johnson. These impending tariffs and the uncertainty they generate can affect the pricing strategies of nearly all consumer technology products reaching the U.S.
Sony and Microsoft, both slated to release new consoles in 2027, are likely to encounter similar hurdles to those faced by Nintendo.
“Setting up new production facilities takes considerable time and capital investment. Manufacturers prefer operating in a stable environment,” Johnson noted. “The current trade climate is the exact opposite.”
Tariffs tied to the release date could have easily inflated Switch 2 prices or delayed its rollout. However, Nintendo avoided this predicament due to the Trump administration’s withdrawal. This scenario is described in financial terms as “Taco,” stemming from Trump’s call for a 90-day tariff suspension to facilitate negotiations with the affected country—allowing the Switch 2 to launch in a timeframe where import duties were not in effect.
Even if negotiations with Vietnam ultimately fall through, reports indicate Nintendo has already shipped approximately 746,000 Switch 2 units to the U.S., which remain exempt from increased tariffs.
Higher add-on costs
Nintendo consumers will not escape the impact of customs duties. The company has indicated that accessories related to the device, which comprise a significant portion of the Switch’s dual functionality, are now experiencing price adjustments. So far, CNBC reports that the dock for playing the Switch on a larger screen costs an additional $10, while the straps for the two controllers are up by $1. Johnson also expressed that he wouldn’t be surprised if Nintendo contemplates increasing console prices over the holiday season, particularly if Trump proceeds with the 46% tariff in Vietnam.
“It’s hard to envision Trump’s administration publishing numerous articles about how he ruined Christmas during the holiday season,” Johnson remarked. “So I hope they find a way through this; still, like everyone else, I am uncertain.”
However, there’s another factor motivating Nintendo to minimize price hikes. A significant portion of its revenue doesn’t come from console sales. Instead, the real profit drivers for Nintendo and its competitors are software and online subscriptions, which are not impacted by customs duties.
“Ultimately, Nintendo aims to sell consoles to enable game and accessory purchases,” Johnson noted. “As a result, they may be inclined to keep console prices down.”
Source: www.theguardian.com
