How Tariffs Impact Consumers and Drive Up Gaming Console Prices
24 March 2025 路 Uncategorized 路
Source: 路 https://technews.tw/2025/03/15/how-much-do-tariffs-raise-prices/
Would you be heartbroken if your beloved Xbox gaming console suddenly jumped in price?
This scenario could soon become a reality for American consumers. Following Donald Trump's potential return to the White House, he has proposed additional tariffs on Chinese imports鈥攊nitially at 10%, increasing to 20% starting March 4th. Furthermore, tariffs of up to 25% have been considered for goods imported from Mexico and Canada.
China, Mexico, and Canada are among America鈥檚 top three trading partners. From smartphones manufactured in China to vegetables and beer produced in Mexico or meat products originating in Canada鈥攁lmost every American household's shopping list could be affected. How would these tariffs impact US families' wallets? The Wall Street Journal partnered with Moody鈥檚 Analytics to model the potential effects.
The study analyzed economic models based on Trump鈥檚 proposed 25% tariff for imports from Mexico and Canada, combined with a 10% rate for other countries (including China). These analyses considered market competition levels and consumer behavior. The research found that how much of these tariffs are ultimately passed onto consumers depends on several factors:
Consider setting up an intimate candlelit dinner鈥攍aying out a beautiful tablecloth to create the perfect mood. Do you particularly care if it鈥檚 made in India or Vietnam? Probably not! That's why Indian-made tablecloths would likely see only about a 2% price increase, even with a 10% tariff; numerous factories worldwide produce similar products, and consumers generally don鈥檛 mind the origin as long as they look good, last well, and are reasonably priced.
In contrast, that $39.99 bottle of whisky you enjoy on Friday nights might see a price increase of about 5-6% under the same tariff level. This is because whisky enthusiasts often have specific brand preferences鈥擲cottish or Japanese brands in particular鈥攁nd remain loyal even if it鈥檚 not an absolute necessity.
The most significant impact from tariffs typically occurs with high-end products lacking substitutes and benefiting from strong brand loyalty.
For example, many physical gaming consoles are manufactured in China within a market dominated by companies like Nintendo, Sony, and Microsoft. The model suggests that imposing a 10% tariff on imported Chinese game consoles could almost entirely be passed onto consumers, potentially raising the price of an Xbox from $500 to around $548.
Similarly, Apple might need to increase iPhone prices by approximately 9%, according to a February analysis by Bank of America, if Trump imposed a 10% tariff on China. This is feasible for Apple due to high user dependency on its ecosystem; most users would likely remain with iOS despite price increases rather than switch to Android.
Mexico supplies about one-quarter (23%) of foreign-made cars imported into the US by volume in 2024. Imposing a 25% tariff could significantly increase new car prices and potentially affect domestic vehicle pricing, while the used-car market would also be impacted due to increased costs for repair parts.
Recent estimates from the Peterson Institute for International Economics (PIIE) suggest that Trump鈥檚 tariffs might cost American households an average of $1,200 annually鈥攁 figure which could increase with further tariff measures.
For export-oriented economies like Taiwan, US tariff policies will also have ripple effects on global supply chains and international trade patterns.
(Author: Wang Zhenyi; Reproduced from Business Week)
This scenario could soon become a reality for American consumers. Following Donald Trump's potential return to the White House, he has proposed additional tariffs on Chinese imports鈥攊nitially at 10%, increasing to 20% starting March 4th. Furthermore, tariffs of up to 25% have been considered for goods imported from Mexico and Canada.
China, Mexico, and Canada are among America鈥檚 top three trading partners. From smartphones manufactured in China to vegetables and beer produced in Mexico or meat products originating in Canada鈥攁lmost every American household's shopping list could be affected. How would these tariffs impact US families' wallets? The Wall Street Journal partnered with Moody鈥檚 Analytics to model the potential effects.
The study analyzed economic models based on Trump鈥檚 proposed 25% tariff for imports from Mexico and Canada, combined with a 10% rate for other countries (including China). These analyses considered market competition levels and consumer behavior. The research found that how much of these tariffs are ultimately passed onto consumers depends on several factors:
Consider setting up an intimate candlelit dinner鈥攍aying out a beautiful tablecloth to create the perfect mood. Do you particularly care if it鈥檚 made in India or Vietnam? Probably not! That's why Indian-made tablecloths would likely see only about a 2% price increase, even with a 10% tariff; numerous factories worldwide produce similar products, and consumers generally don鈥檛 mind the origin as long as they look good, last well, and are reasonably priced.
In contrast, that $39.99 bottle of whisky you enjoy on Friday nights might see a price increase of about 5-6% under the same tariff level. This is because whisky enthusiasts often have specific brand preferences鈥擲cottish or Japanese brands in particular鈥攁nd remain loyal even if it鈥檚 not an absolute necessity.
The most significant impact from tariffs typically occurs with high-end products lacking substitutes and benefiting from strong brand loyalty.
For example, many physical gaming consoles are manufactured in China within a market dominated by companies like Nintendo, Sony, and Microsoft. The model suggests that imposing a 10% tariff on imported Chinese game consoles could almost entirely be passed onto consumers, potentially raising the price of an Xbox from $500 to around $548.
Similarly, Apple might need to increase iPhone prices by approximately 9%, according to a February analysis by Bank of America, if Trump imposed a 10% tariff on China. This is feasible for Apple due to high user dependency on its ecosystem; most users would likely remain with iOS despite price increases rather than switch to Android.
Mexico supplies about one-quarter (23%) of foreign-made cars imported into the US by volume in 2024. Imposing a 25% tariff could significantly increase new car prices and potentially affect domestic vehicle pricing, while the used-car market would also be impacted due to increased costs for repair parts.
Recent estimates from the Peterson Institute for International Economics (PIIE) suggest that Trump鈥檚 tariffs might cost American households an average of $1,200 annually鈥攁 figure which could increase with further tariff measures.
For export-oriented economies like Taiwan, US tariff policies will also have ripple effects on global supply chains and international trade patterns.
(Author: Wang Zhenyi; Reproduced from Business Week)