President Trump’s tariffs have obviously caused a wild ride in the economy and the markets since April 2. For the games industry, games that are digitally distributed are not subject to the tariffs that have been rendered on goods. For consoles, physical games, mobile phones, gaming laptops, servers, and more – these are all subject to the tariffs. This is not a textbook example of issuing tariffs that one would learn in graduate school as a student of International Economic Policy or Trade Relations. This is an unusual situation causing much chaos, and one that we need to consider for all sectors, even the video game industry.
Tariffs are not the only problem at hand. Gamers are consumers, and consumers in some of the Asian markets that are most impacted by the tariffs can sometimes behave quite nationalistically and loyally to their own leadership. No matter where the tariff level ends up, consumers can offer their own backlash against products and services from the United States in a form of protest.
Chinese consumers offer historic precedence for this type of behavior. There was a three-year period from 2017-2020 when Chinese regulators halted all ISBN approvals for Korean games and while the reason was not articulated, observers surmised that the reason was geopolitical and related to the South Korean land allocation for the THAAD missile defense program. Further, Chinese consumers boycotted products of all sorts from South Korea, in solidarity with the governmental sentiment, including things such as skin care products and K-Pop. On the other hand, there was limited impact to legacy Korean games already on the market, such as Dungeon & Fighter, CrossFire and more. Missiles generally have zero connection to retail purchases of skin care products and pop music or video games, but in those years that was exactly what happened.
It is not far-fetched to think that even if “a deal is struck” for tariffs and other issues between the US and China, Chinese consumers would protest the economic uncertainty by avoiding US products and even by avoiding US technology and games. In fact, Chinese social media already has consumer discourse about a consumer-led rebuke against US-products. The same could become true in Vietnam, Japan, South Korea, Thailand and so many other countries. Chinese regulators could very well block US games from ISBNs, and may even take a closer look at blocking Steam International, which is currently a major part of China’s gaming ecosystem despite officially illegally operating.
Then, one could envision a total ban on TikTok US…
Corporate sentiment and investment behavior basically switched from “on/happy” to “off/unhappy” on one day – “Liberation Day”, April 2, 2025. The games industry had finally started to see more investment, bringing fresh hope, albeit alongside continuing layoffs. Analysts, including us here at Niko Partners, Matthew Ball and others, recently wrote about the growth promise for global game developers and publishers of geographies that had emerged over recent years into legit video game markets, particularly in Asia and MENA, which Niko Partners covers in depth all day, every day. If those markets are thrown into turmoil by tariffs or the threat of tariffs, there will be far less investment in growing the games and gaming hardware sectors there.
Another aspect is hardware manufacturing. In Q1 2025 Niko analysts surmised that one to threats of tariffs on goods from China was real estate developers in Vietnam, Indonesia and elsewhere in Asia, because Chinese factories were being moved to other countries in an attempt to hedge against the tariffs. As of the time of this post there is a 90-day pause with the exception of China, EU, Canada and Mexico for special tariffs on certain sectors of those economies. Now, the question remains: where will consoles, handhelds, phones, servers, mice, keyboards, and more ultimately be produced, and at what tariff rate will they succumb to the US?
With regard to consoles specifically, in 2019 there was a carve out for consoles to the tariffs the US imposed on China. The fact is that there are zero Chinese console manufactures competing globally, and the major three companies – Microsoft (US), Nintendo (JP), and Sony (JP, with PlayStation in the US) – should be carved out. In fact, the 2019 tariffs were a motivator for Nintendo to open manufacturing in Vietnam. 75% of all consoles shipped to the US in 2024 were made in China, with the remainder made in Vietnam, Japan and Cambodia. The only losers in slapping tariffs on Chinese-manufactured consoles of US and Japanese companies are the global gamer, many of whom are American, and global console game developers, many of whom are American.
In conclusion, the tariffs aren’t falling on games, unless they are physical, packaged products. They instead are causing a strong risk to the investment necessary for the recovery of the slaughtered games market, a strong risk to acceptance of US game titles and hardware among consumers in the impacted Asian countries, and a strong risk to next gen console sales, such as Nintendo’s Switch 2, who have now delayed pre-orders in the US & Canada. Nintendo had originally anticipated potential tariffs on China, increasing manufacturing capacity in Vietnam, but no one saw the high 46% tariffs on Vietnam coming. With tariffs on Vietnam temporarily reduced for the next 90 days, we expect Nintendo to eat the 10% tariff in order to keep the launch price at $450. However, the price could very easily increase if a higher tariff is added after 90 days. It is a cautionary tale.
Luckily, for those of you still reading this post, Niko Partners has local analysts covering the 13 markets we track in depth, and we will keep you informed of risk, reward and opportunity in those countries that arise from the tariffs, the threat of tariffs, or the economic fall out of the past weeks and months. Your business is now in a state of uncertainty, so we are here to help you make sense of it all and to track the markets, build your localization strategy, do due diligence on your own investments, and strategically model and market how to access the avid gamers who live in Asia. Niko Partners will publish our 2025 market model reports in June, taking into consideration the impact of tariffs as they stand at the time. Contact Us for more information!
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