It was a big week for the global economy and gamers.
On Wednesday, President Donald Trump announced the cleaning fees that sent a spiraled market around the world. On the same day, Nintendo announced the Switch 2, the much-anticipated handheld gaming console.
The company said the bundle, which includes the latest Mario Kart game, costs $450 and $500. Pre-orders for the Nintendo website will open in early May with the release date of June 5th only to the most dedicated users of the first generation Switch.
But by Friday, Nintendo had scrapped those plans.
In a statement, the company said “the potential impact of tariffs and evolution of market conditions should be assessed,” revealing the possibility of price increases and delaying the date of booking order.
As of November 30, 2024, over 46 million switch consoles were on sale in the US, and the rebound was fast. Gamers had already complained about how expensive the Switch 2 is before the potential price hike could be. By Friday, some suggest that Switch users' mismatch chats could potentially cross borders and head to Canada to see US prices for next-generation systems even higher.
Ultimately, the Switch 2 is a gorgeous item. Trump's tariffs should not be someone's number one priority given that they are expected to raise prices, and broadly support the global supply chain, even basic necessities.
But this is an example of how Trump's tariffs are wreaking havoc in an economy where Americans are used to the relatively low prices of imports, especially home appliances.
“The Mansfield Foundation has a specialised in Indo-Pacific trade and economic benefits,” said Shihokotogoto, a senior fellow at the Mansfield Foundation. “This is just one example of a product where one company has suffered from tariffs. We also see a price rise across the board.”
Why Nintendo raises prices
Japanese company Nintendo took preemptive steps to avoid tariffs during the first Trump administration. In 2019, the US imposed tariffs on Chinese imports, and began moving some of the production of the switch from China to Vietnam.
Now, the US is effectively punishing businesses like Nintendo, and with Trump's incentives, leaving China for friendly partners like Vietnam, a large producer of appliances, shoes and clothing.
Vietnam was hit by 46% tariffs. This is one of the highest rates on the White House's schedule announced Wednesday. That's because Trump has tried to target Vietnam and other countries with high trade surpluses with the United States.
However, he ignores why Vietnam has a trade surplus with the United States. It is relatively poor and cannot afford many American-made products.
Trade analysts also argue that Vietnam's exports benefit both the country itself and its trading partners. At low cost, it produces high demand goods traditionally made in China.
“One of the reasons why we can get pretty affordable shoes and fabrics is because they are imported from locations in South and Southeast Asia,” Goto said.
Slapping tariffs on goods from Vietnam and other manufacturing hubs increases the cost of producing and exporting goods to the American market. Companies like Nintendo are expected to communicate that to consumers in the form of higher prices. As a result, consumers may ultimately decide that they will no longer be able to purchase optional items like Switch 2.
“Many belts will be tightened in optional consumer goods, especially consumer electronics,” Goto says.
Why the Promised Director probably won't happen
Trump's plan is to help businesses want access to the US market, move production to the US and revive domestic manufacturing in the long run. However, this seems unlikely to occur in many industries, such as home appliances.
gaming industry analyst Daniel Ahmad posted on X that Nintendo “will need to spend billions of money opening factories in the US.” It can take 4-5 years to run the factory. By then there could be another US president rolling back tariffs. However, if they remain in place, the source components of the switch, such as the GPU, will be made outside the US and are subject to customs duties, leading to increased costs. Labor costs are 15 times higher in the US than in Vietnam.
Adding it all makes the switch cost much more than $450. Americans are unlikely to accept such a type of price increases, especially given that patients are already struggling to accommodate post-pandemic prices.
“We want high quality, low cost products, and it would be difficult to make them in the US,” Goto says.
