Tariffs on Fun
Last week I began writing about my experiences with Starfinder, but sometime during the week some bad news started filtering into my feed.
Board games are in trouble.
Among the huge list of perspective goods to be hit by President Trump’s tariffs, entertainment is a big target. Board games (and many of the components that go into making them), video games and consoles, tvs, and hundreds of other products and parts will be subject to a 25% tariff starting sometime this June.
Let’s start by talking about tariffs. The word has been thrown about in the news but even the President doesn’t seem to grasp how they work, or how they affect American businesses. A tariff is a tax imposed by a country, the US in this case, to discourage business owners from buying foreign products and instead choosing to purchase from local (US based) companies. If the business chooses to continue purchasing from the tariffed country, that business would owe the US the imposed tax. The tarriffed country, China in this instance, never pays a dime. The burden falls solely on American businesses and their consumers.
“Well, buy American then!” I hear so many people say. Unfortunately, the economy has changed a lot in the past few decades and this just isn’t possible in many cases. Even things labeled as “Made in the USA” are often just assembled here, using components and materials from around the world. For example, this could mean that even though a lawn mower is “American Made” the company might get it’s aluminum from China, their electronics from South Korea, and some pre-built mechanical parts from Germany. They then create and assemble the machine from these parts and other, mostly American, materials somewhere in Indiana. If the price of Chinese aluminum suddenly increases by 25%, that company will have to pass that increase on the consumer, or find another source that produces aluminum for less. The downside to this is that China is the #1 aluminum producing country in the world. Everyone gets their aluminum from China, and have done so for decades, many countries even shutting down any production due to the availability of affordable, quality product. Even if the company wanted to buy American, it might cost them even more and increase their end price even further, or worse not be able to get as much as they need due to the smaller output of the new source. This business is now between a rock and a hard place and the consumer is the one who gets squished.
The same situation will soon be applying to board games. A huge percentage of board games are manufactured in China. If not completely then many of the plastic components certainly are. As these prices rise, manufacturers will pass this along to retailers, who will have to pass it down to consumers. As many people may know, board games can already be an expensive hobby. If you play tabletop miniatures games… whew! Games can easily run 30–45$, more for a large game or if the game contains a lot of components like miniatures or dice. Adding an extra 25% on top of that could very easily scare off or price out a large chunk of customers. This could devastate small game stores, as the profit margins for many games are very thin, as low as 5% in some cases. When you add the competition of online giants like Amazon, setting prices is often out of your hands.
On the design and development side, the board game industry is a very competitive place. With Kickstarter and indie game companies adding to the huge variety of games available, keeping costs low is a way to carve out of chunk of the market and get your game on shelves. Keeping the price low means it’s already hard to survive in this industry. Cost hikes like this, many of which can happen overnight, can destroy many small game development companies. Especially when projects have already been planned and projected with predetermined costs in mind.
The reality is that the US simply doesn’t have the manufacturing infrastructure to pick up this kind of business. If the purpose of tariffs is to encourage businesses to buy American, there has to be a American company to buy from. While the US might be great at producing airplanes or coal, it does not have the ability to produce the volume, or quality, of game components that many companies require to keep going. While “Made in America” is a nice sentiment, it just doesn’t work practically anymore.
As for the end consumer, we can expect increased prices, reduced product variety, a drop in Kickstarter games, and overall scarcity as our friendly local game stores struggle to deal with these changes. All the more reason to support these businesses over big box stores and Amazon. Not to mention that these price increases almost never fully bounce back. Even if the tariffs eventually end, each level of the supply chain tries to recoup a little of it’s loss by either keeping the prices just a little higher than they were, or worse sacrificing quality to continue to produce at the lower prices. This leaves consumers with more doubt about value for money.
What do we do about it then? Well the list of proposed tariffs is just that, proposed. There is still time to reach out to our elected representatives and express how we feel about these tariffs. Public hearings on the proposal will also be held, and during this time companies and individuals can speak on the tariffs. Requests to exclude specific subheadings will also be heard. The subheadings dealing with board games are:
9504.90.60. “Chess, checkers, backgammon, darts and o/table and parlor games played on boards of a special design and parts thereof; poker chips and dice.”
9503.00.00. “Toys, including riding toys o/than bicycles, puzzles, reduced scale models.”
While the President is ultimately making this decision, it is a decision that could severely limit American business owners. This is a growing industry that has only boomed in recent years, and these tariffs could cripple it and make it harder for all of us to play the games we love. While I haven’t given up on my business plan, the next few months will be very telling.
