Absolutely. The console is manufactured in Vietnam, which now has a 46% tariff. I really doubt that Nintendo’s profit margin is high enough to allow them to just eat that cost.
They already factored in some amount of tariffs into the US price. It’s not really that it’s cheaper in Japan, but rather it’s more expensive in the USA. It’s also US$65 cheaper in Australia, for example, and even cheaper in the UK.
(keep in mind that advertised prices in Australia and the UK include tax, so you need to subtract the tax to compare with US prices)
The tariffs are just a lot higher than everyone expected. Nintendo were probably preparing for a 20% tariff, not a 54% one.
Savings for who? If nothing is changed and manufacturers (and retailers) doesn’t make any kind of commercial gesture, the only ones paying more are the American consumers.
So moving the manufacture would be a saving for every Joe and Jane in the US, not Nintendo nor the ROTW.
Not moving the manufacture might be a loss of % in their US consumer base as prices will be too high there, but is it big enough to justify the enormous costs needed to move an entire industry workflow?
I don’t think so, specially when there is so many instability in the US politic, if you move to an other country at great cost and 2 weeks later a new tariff is declared (because why not), you moved everything for no reason but still lost your investment.
My belief is that no industry nor country will adapt, they will just increase the US market prices and keep on living like before with the ROTW. The only ones to suffer will be the American citizens and I’m sorry for them, but there is an all planet to trade with.
If you have a product that cost 500 with a markup of 50, but tariffs are pushing it to 750, it could easily be worth spending 50 to reduce tariffs to 650 and sell it at 700. You make just as much profit on each unit and you reduce the per unit cost which likely means more sales.
What?
You have a product that costs 450 to produce.
And you add a 50 markup so you are selling at 500.
Tariffs push that 500 up to 750. Which means a 50% tariff.
So you remove your 50 markup and sell it at cost in that market. Which means a product at 450 with a 50% tariff will cost 675.
You don’t make any money on that sale. Fine, it’s a loss-leader. Hopefully you make up the profit of game sales and subscriptions. Which will also be tariffed.
For a finished product, the tariff is applied to the selling cost. It doesn’t care about the value of the parts or the amount of markup.
A government isn’t going to pick through a device and apply Country of Origin tariffs on every part, or separate company profit from cost-of-product.
If a company says a product is worth 500, that’s the amount the tariff is applied to.
I doubt Nintendo is going to eat the cost of tariffs.
It’s insane to. They could say “we will still launch at this price”, and have the us government cook up more tariffs or whatever. Then Nintendo is holding the bag, or has to renege on the price.
It would be smarter to mildly offset the cost. Like you say, knock $20-50 off but stipulate the final cost is subject to import duties.
I’d love them to say “well, you do you. This is the cost of the console. Your import duties are not out problem.” But I feel (despite their bullshit legal department) Nintendo is more passionate than that, and I think they will mildly reduce the price
Absolutely. The console is manufactured in Vietnam, which now has a 46% tariff. I really doubt that Nintendo’s profit margin is high enough to allow them to just eat that cost.
Which begs the question of why the console is going to be $100 cheaper for Japanese than anyone else even before you factor in the tariff situation.
They already factored in some amount of tariffs into the US price. It’s not really that it’s cheaper in Japan, but rather it’s more expensive in the USA. It’s also US$65 cheaper in Australia, for example, and even cheaper in the UK.
(keep in mind that advertised prices in Australia and the UK include tax, so you need to subtract the tax to compare with US prices)
The tariffs are just a lot higher than everyone expected. Nintendo were probably preparing for a 20% tariff, not a 54% one.
Couldn’t they move it to another country first to reduce it a bit?
That would cost them enormous amounts of cash and hours of work just for one market.
There’s no point, the best option is just to ignore the US and let them pay more than the rest of the world, even if that means fewer sales.
Well does it cost them more or less than the tariff. That is pretty much the only question, its not that much work if it results in a lot of savings.
Savings for who? If nothing is changed and manufacturers (and retailers) doesn’t make any kind of commercial gesture, the only ones paying more are the American consumers.
So moving the manufacture would be a saving for every Joe and Jane in the US, not Nintendo nor the ROTW.
Not moving the manufacture might be a loss of % in their US consumer base as prices will be too high there, but is it big enough to justify the enormous costs needed to move an entire industry workflow?
I don’t think so, specially when there is so many instability in the US politic, if you move to an other country at great cost and 2 weeks later a new tariff is declared (because why not), you moved everything for no reason but still lost your investment.
My belief is that no industry nor country will adapt, they will just increase the US market prices and keep on living like before with the ROTW. The only ones to suffer will be the American citizens and I’m sorry for them, but there is an all planet to trade with.
If you have a product that cost 500 with a markup of 50, but tariffs are pushing it to 750, it could easily be worth spending 50 to reduce tariffs to 650 and sell it at 700. You make just as much profit on each unit and you reduce the per unit cost which likely means more sales.
What?
You have a product that costs 450 to produce.
And you add a 50 markup so you are selling at 500.
Tariffs push that 500 up to 750. Which means a 50% tariff.
So you remove your 50 markup and sell it at cost in that market. Which means a product at 450 with a 50% tariff will cost 675.
You don’t make any money on that sale. Fine, it’s a loss-leader. Hopefully you make up the profit of game sales and subscriptions. Which will also be tariffed.
For a finished product, the tariff is applied to the selling cost. It doesn’t care about the value of the parts or the amount of markup.
A government isn’t going to pick through a device and apply Country of Origin tariffs on every part, or separate company profit from cost-of-product.
If a company says a product is worth 500, that’s the amount the tariff is applied to.
I doubt Nintendo is going to eat the cost of tariffs.
It’s insane to. They could say “we will still launch at this price”, and have the us government cook up more tariffs or whatever. Then Nintendo is holding the bag, or has to renege on the price.
It would be smarter to mildly offset the cost. Like you say, knock $20-50 off but stipulate the final cost is subject to import duties.
I’d love them to say “well, you do you. This is the cost of the console. Your import duties are not out problem.” But I feel (despite their bullshit legal department) Nintendo is more passionate than that, and I think they will mildly reduce the price
Maybe! I’m sure there’s loopholes of some sort.