It’s still unclear if the PS5 and Xbox Scarlett consoles will be hit by a new tariff rate, something that is it out of the control of Sony and Microsoft.
Gamers are still hoping to see the next generation of consoles hit the market with price tags around $400.
There is a chance that they could be higher, closer to $500, especially if consoles are included a new round of US tariffs currently being delayed by the U.S. Trade Representative.
The good news for tech companies is that trade talks between China and the United States are being re-opened, raising hopes of a resolution before the expected 2020 release dates of both consoles.
And until these new talks are fulfilled, it seems unlikely that the newly proposed console tariffs will come into effect.
Some companies have started to move their manufacturing hubs away from China, although, that number reportedly remains small.
“A number of enterprises have been affected by Sino-US trade frictions and relocated out of China, but the number is small,” Chu Shijia, from China’s Ministry of Commerce is reported by South China Morning Post as saying.
Sony has hinted they may be forced to move some parts of their business, although there is no indication of this happening yet.
And analysts believe that the current shift in talks may help to bring temporary stability to all concerned.
“The trade war is no longer worsening, and that is the best news for Beijing,” said Liu Kaiming, head of the Contemporary Observation Instuite based in Guangdong.
“If bilateral relations can remain stable, there may be a buffer period of five or even 10 years for China’s manufacturing industry to continue to upgrade and transform.”
But there have also been other points raised about potential sticking points, some of which caused issues during earlier trade talks.
“If the two sides are to reach a deal, all imposed tariffs must be removed,” Ministry of Commerce Spokesman Gao Feng is quoted by Bloomberg. “China’s attitude on that is clear and consistent.”
The problem with this is that the US team have confirmed that they want some duties to stay in place after a deal is struck as a way to enforce it.
So while there have been some big updates this week concerning the new tariff talks, it’s hard to say whether new ones will be enforced this year or not.
If they are, they will affect Sony, Microsoft and Nintendo, as noted in a recent joint letter released by the companies.
The joint letter raises interesting points about the impact of tariffs, adding: “Although our video game consoles provide a critical foundation for our businesses by driving demand for games and services, we sell them under very tight margin situations, meaning that we price video game consoles at—or slightly above—cost to make them as affordable as possible, and look to the sale of video games and services, which are much lower priced, to drive economic returns.
“Console purchasers are extremely price sensitive. In 2018, approximately 110 million console gamers in the United States spent around $15 billion on video game software and services, equating to over $130 in annual software and services spend per game.”
“A price increase of 25% will likely put a new video game console out of reach for many American families who we expect to be in the market for a console this holiday season.
“For those purchases that do go forward despite tariffs, consumers would pay $840 million more than they otherwise would have.”
Analysts will be keeping a close eye on negotiations before making new predictions regarding the price of the PS5 and Project Scarlett on release date.
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