How the Nintendo Switch 2 delay explains Trump’s tariffs

It was a big week for the global economy — and for gamers.

On Wednesday, President Donald Trump unveiled sweeping tariffs that have sent markets spiraling worldwide. On the same day, Nintendo also announced its much-anticipated handheld gaming console, the Switch 2.

It would be priced at $450, or $500 for a bundle including the latest Mario Kart game, the company said. Preorders on the Nintendo website would open in early May to only the most dedicated users of the first-generation Switch, with a June 5 release date.

By Friday, however, Nintendo had scrapped those plans.

The company said in a statement that it needed to “assess the potential impact of tariffs and evolving market conditions,” leaving open the possibility of a price hike and delaying the preorder date.

More than 46 million Switch consoles have been sold in the US as of November 30, 2024, and the backlash has been swift. Gamers were already complaining about how expensive the Switch 2 was before the possibility of a price hike. By Friday, some suggested in a Discord chat for Switch users that they might go across the border to Canada to avoid even higher US prices for the next-generation system.

Ultimately, the Switch 2 is a luxury item. It shouldn’t be anyone’s first priority, given that Trump’s tariffs are expected to increase prices even for basic necessities and upend global supply chains broadly.

However, it’s an example of how Trump’s tariffs are wreaking havoc in an economy where Americans are accustomed to relatively low prices for imported goods, especially consumer electronics.

“It’s a pricing issue that is a direct response to the tariffs,” said Shihoko Goto, a senior fellow at the Mansfield Foundation specializing in trade and economic interests across the Indo-Pacific. “This is just one example of one product from one company being hit by tariffs, and we’re going to see price increases all across the board.”

Nintendo, a Japanese company, took preemptive steps to avoid tariffs during the first Trump administration. In 2019, it started moving some of its Switch production from China to Vietnam as the US imposed tariffs on Chinese imports.

Now, the US is effectively punishing companies like Nintendo that took Trump’s incentives to leave China for friendlier partners like Vietnam, which is a large producer of consumer electronics, shoes, and clothes.

Vietnam was hit with 46 percent tariffs, one of the highest rates on the schedule that the White House unveiled Wednesday. That’s because Trump has sought to target Vietnam and other countries that have a high trade surplus with the US, believing that they’re “cheating” America.

However, he ignores the reason why Vietnam has a trade surplus with the US: It is relatively poor and cannot afford to buy many American-made goods.

Trade analysts have also argued that Vietnam’s exports benefit both the country itself and its trading partners. At a lower cost, it has produced high-demand goods that were traditionally made in China.

“One of the reasons why we can have fairly affordable shoes and textiles is because they are imported from places in South and Southeast Asia,” Goto said.

In slapping tariffs on goods from Vietnam and other manufacturing hubs, the cost of producing and exporting goods to the American market will go up. Companies like Nintendo are expected to pass that on to the consumer in the form of higher prices. As a result, consumers may ultimately decide they can no longer afford optional goods like the Switch 2.

“There’s going to be a lot of belt tightening on optional consumer goods, especially on consumer electronics,” Goto said.

Trump’s plan is that, in the long run, companies will want access to the American market and move their production to the US, reviving domestic manufacturing. However, that doesn’t seem likely to occur in many industries, including consumer electronics.

Daniel Ahmad, a gaming industry analyst, posted on X that Nintendo would “need to spend billions to open a factory in the US.” Getting a factory up and running would likely take four to five years, by which time there could be another US president who rolls back the tariffs. But if they remain in place, source components for the Switch, such as GPUs, are made outside the US and are subject to tariffs, leading to increased costs. Labor costs would also be as much as 15 times higher in the US than in Vietnam.

Add all that up, and the cost of the Switch becomes much higher than $450. Americans aren’t likely to accept those kinds of price increases, especially given that they were already struggling to keep up with higher prices post-pandemic.

“We want high-quality, low-cost goods, and it’s going to be difficult to make that in the United States,” Goto said.