Teaching Tariffs Using Games and the Game Industry

When discussing tariffs, sometimes it is really tricky to understand their impacts, potential pitfalls, benefits, and more without clear and concrete examples. As an independent game publisher who researches where to manufacture games and how to sell games internationally, I have some good perspectives on how tariffs impact our industry! I wanted to share how the current tariffs factor in to how we approach our manufacturing, marketing, and selling of board and card games!

Pricing Games – Tariffs Can Lead to Increased Consumer Price and Marketing Costs

We are currently preparing to release our second game, Doomscroll, and we are having to work in the unexpected tariff costs into our final MSRP (Manufacturer’s Suggested Retail Price). Originally, we were going to charge $35 for our game, but now we’ve decided to raise it to $40 as a result of tariffs (at the time, Chinese exports had a 54% tariff rate on them). 

I’ve created two sets of graphics to illustrate what costs go into our game per copy, as I think it is the easiest way to understand the tariff’s impact. For Doomscroll, we manufactured the game for around $5, and the estimated tariff costs will be around $3. As you can see, other costs that stay the same are our international shipping ($2), fulfillment of order ($10), art/graphics costs ($8), and the margins of what we make ($5). What also changes due to tariffs are our expected costs to market per game, which we usually estimate to be about $5/copy. However, since tariffs often impact consumers in the form of inflation and higher costs of living, we are estimating that we’ll need to add additional marketing in order to compete for consumers’ purchasing attention, and thus will spend $7 per copy on marketing.

*Edit on April 9th – As of 1:30 PM on this date, the US raised the tariffs from the 54% level on China used to make the above calculations all the way to 125%. We are unsure if our games will be subject to this increase, as they left port before April 9th and thus hopefully are exempt. Below is a graphic of what would happen if we kept our $40 MSRP – essentially each game would cost around $7 in tariffs and our profit margin per game would be $1 if we are lucky. As you can imagine, that is not enough cushion to successfully run a business.

Manufacturing of Games – Where It Happens and Tariff Implications

One potential goal of tariffs on other countries is to encourage companies to have their products produced in the United States. For some industries, tariffs could push a company to do so – a great example would be the auto industry, where not only tariffs, but incentives about producing electric and hybrid vehicles in the United States have come from the government to spur job creation. 

In the board and card game production world, United States manufacturers simply have a difficult time acquiring the materials needed and producing the quality of components that other markets, such as China, have mastered. To give an example, I requested a quote for our first game, Gamestormers, from a U.S. based manufacturer. For around 2,500 copies of our game, it would have cost around $19 per game to be produced. In comparison, in China we would have run about $6 per copy for Gamestormers had we done a run of 2,500 games (we did a run of 1,500 games for slightly more per copy instead). Even when factoring in a 54% tariff on top of the $6, you’re looking at about $9 a copy. Yes, you have to get those games across the sea, but international logistics usually only runs about 25-30% of your total shipment cost. In this case, it would take us around $12 “landed cost” to get Gamestormers over to the US, versus the $19 cost for making it in the US.

Selling Games to International Audiences – Reciprocal Tariffs on Games

One reality of selling to individuals and companies outside of the United States that has been around prior to recent tariffs is the value-added tax. Many nations place this additional tax on goods shipped into their countries and pass this onto the recipient – often the consumer. Similarly, the tariffs imposed on other nations by the U.S. of late have led to reciprocal tariffs, or tariffs placed in response to new tariffs. As a result, if the tariff does NOT exclude small cost items such as games, recipients would pay more for games, making them less likely to buy them.

Some companies have offered to subsidize these value-added tax costs and tariffs, but this usually means the total price of the item also rises to help cover the expenses. Another option for companies is to ship games from the manufacturer in China directly to a country where many buyers are located, such as the United Kingdom or Australia. A fulfillment company there could then distribute the games. However, this requires a LARGE amount of orders from one country to be economically viable – for a small publisher like myself, it simply is not possible cost-wise.

*Edit on April 9th – As of 1:30 PM on this date, the US President has paused many of the tariffs on countries across the world, save for China. As a result, there might be less of an issue of international shipping charges than before!

Have any questions for me about tariffs and manufacturing, selling, and shipping games? Feel free to ask in the comments!