Japanese video game company Nintendo is confronted with the harsh reality of trade uncertainties following US US-imposed tariffs, as it readies for the Switch 2 debut.
This is scheduled for a June 5 launch, according to Reuters, marking exactly eight years after the original Switch, which sold 150 million units, proving wrong those who anticipated a decline of the console.
Nintendo should gear itself for tariff-induced disruptions
As the trade war persists with a focus on cars and chip-making industries, the gaming industry is not spared either. As such, the maker of “Super Mario” and “Donkey Kong” games is also expected to brace itself for tariff-induced disruptions.
Tariff challenges are expected to weigh on businesses across sectors, in terms of logistics and subsequently their profitability.
For Nintendo, trade barriers are, according to Reuters, seen as complicating one of the hottest product launches this year, as the success of Switch 2 will test the company’s ability to manage its supply chain. This also comes as the gaming company is looking at securing enough supply for the US market while keeping its $449.99 price tag, a significant jump from its predecessor’s $299 price.
“If the tariffs are really going to hit them, they probably still need to raise the price for Switch 2.”
Serkan Toto, founder of the Kantan Games consultancy.
Nintendo announced the device’s price and launch date on April 2, the same day that the US President Donald Trump also announced import tariffs, after an initial reveal in January.
The video game company then delayed the start of US pre-orders as it assessed the impact of the tariffs before announcing it would keep the pricing for Switch 2 pre-orders starting on April 24.
Nintendo increased the cost of some accessories and revealed in a statement that other adjustments “are possible in the future depending on market conditions.”
“The accessory price hikes can only soften the blow to some extent,” said Toto.
According to Reuters, Nintendo has experienced some supply chain ructions of late, with production not limited to China, which has been slapped with 145% tariffs on goods being exported to the US.
Nintendo turns to Vietnam and Cambodia to reach the US market
As the trade wars rage, Nintendo is looking at ways of surviving amid the tariff standoff, which has sent shock waves across the globe and threatens to cause supply chain disruptions.
For Nintendo, part of the answer is Cambodia and Vietnam.
“Nintendo plans to supply the US from Vietnam and Cambodia production, under normal demand assumptions,” said Robin Zhu, an analyst at Bernstein.
This relief might be short-lived as both Vietnam and Cambodia have also been hit with tariffs, although the higher levies have been paused for 90 days.
About 44% of Nintendo’s sales for the year to March were in the US, making it a significant market for the company.
“Even in the bear case where Nintendo faces reciprocal tariffs of 46% in Vietnam and 49%in Cambodia, I’m assuming they will have to absorb that cost.”
Jay Defibaugh, an analyst at CLSA.
An Ampere Analysis projects sales of 4.6 million Switch 2 units in the US this year, and out of 13.2 million globally.
“I don’t think momentum will be impacted in North America,” said Piers Harding-Rolls, an analyst at Ampere Analysis.
Some experts are of the view that hardcore fans can buy Switch 2 even at higher prices, although a hike could risk reducing demand among the casual players who turned the original Switch into a mega hit.
While discussions around the price and the possible impact the trade wars will have on the company, some experts maintain that the price tag already factors in the uncertainty over the trade war.
According to Reuters, there is a generally positive sentiment about prospects for Switch 2. It offers continuity from its predecessor, with a larger screen and better graphics.
“There is a lot of pent-up demand for a more powerful Switch experience,” said Harding-Rolls.
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This articles is written by : Nermeen Nabil Khear Abdelmalak
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