Gaming industry faces threat of Trump tariffs 'glitching out' growth

Experts say tariffs could 'glitch out' any prospects of growth in the video game sector.

Millions of game consoles and gaming computers are made outside of the United States.

Despite his pause on reciprocal tariffs for most trading partners, announced on Wednesday, President Donald Trump may still go ahead with his planned levies. He says it's time to make the country wealthy again - a statement regarded as simplistic and shortsighted by most economists.

"Right now, this is a really, really big concern," says Christopher Dring, Editor-in-Chief of trade publication, The Game Business.

"I almost see it as a threat to the industry as we know it. You've got these components from around the world – most of them from Asian countries, and most of them facing huge tariffs. So these products could become extremely expensive in the U.S."

But it's not just hardware like consoles and PCs that could take a knock. Some console makers, like Japan's Nintendo, play a big role in the promotion and development of games. Dring says tariffs could hurt profit margins, making companies less willing to invest in new products.

"You end up in this weird cycle where companies play it safe out of fear," he explains. "They focus on what they do well, rather than try new things. But it's the new ideas that grow the market. So you end up in this situation where it's the same old things being made, and so you end up in this downward spiral."

There are already signs of trouble. Nintendo announced last week that pre-sales of its Switch 2 console would start in early May. It put that plan on hold when Trump announced the latest tariffs, saying it wanted to assess the impact they could have on its products. The company is, however, still set to unveil the Switch 2 on its original launch date, June 5.

The turmoil in the sector comes less than a year after the release of 'Black Myth: Wukong'. Developer Game Science says it sold more than 10 million units in just three days, making 'Black Myth' one of the fastest-selling titles ever.

The game is based on a Chinese book written 400 years ago, and yet it was a smash hit around the world. Researchers say its success proves that games are far more than just a hobby.

"Games have an incredible power to connect people across cultures," says Dr Timothy Peacock, director of the Games Lab at the University of Glasgow. "They make you feel that you're inside the story. You're mastering skills. You're facing moral challenges. You're experiencing growth. And this is something that helps create that deeper engagement. And all of this sparks global conversations that bring people together."

But there may be fewer of those conversations if the gaming industry takes a blow.

'It's already difficult to achieve success in video games," says Dring. "It's about to get even harder, and you have to wonder if investors and game companies will try to build another project like 'Black Myth'. There is a fear that they won't take that risk."