PS5 Consoles May Cost More and Physical Games Could Be Killed by US Tariffs, Analysts Warn

As pledged, the US government has introduced tariffs on goods imported from China, Canada, and Mexico. According to analysts, these measures will have a profound impact on the games industry at large, including PS5 games and consoles.

For those who haven’t been following the news, the United States has placed 25% tax on virtually all imports from Canada and Mexico, as well as 20% tax on goods from China.

While, in theory, it’s possible for the companies manufacturing said products to eat the costs, analysts and retailers predict the taxes will be passed on to consumers. That means more expensive products overall.

And analysts have been weighing in on what all this means for gamers, with most hardware manufactured in China and physical games predominantly printed in Mexico.

Daniel Ahmad of Niko Partners explained that around 75% of video game hardware is imported from China, and while some companies have been moving their manufacturing to Southeast Asia in anticipation of these issues, it’ll take time to scale up their operations.

Sony, for the record, has said it’s “stockpiling a certain level of strategic inventory in the US” to buy itself time, but it’ll be hit by the tariffs once it’s run through that stock. It’s also revealed it’s looking to mass-produce PS5s in other countries.

But while that may ultimately shield US consumers from price increases to PlayStation hardware, Circana analyst Mat Piscatella argued that this could be a death knell for physical games.

He said: “It wouldn't surprise me to see physical games that would be subject to tariffs simply not get made, with publishers moving to an all-digital strategy.”

We already know the market for boxed video games is in decline, but with most Blu-rays printed and packed in Mexico, this could be the final blow.

Companies could move production into the US or elsewhere, but with physical game sales already slumping, Piscatella’s hypothesis that publishers may simply not bother makes sense.

Of course, we’ll need to wait and see how all this shakes out. It’s still possible the video game industry may be able to negotiate concessions for the tariffs, for example. And at this early stage, we’re yet to truly understand the impact on the price of games and hardware.