By Christopher Mims

It was the greatest tragedy that could possibly befall our household, at least according to my 15- and 12-year-old sons: Their plan to pool their savings and preorder the eagerly anticipated Nintendo Switch 2 game console was foiled by the Trump administration.

Nintendo announced the full details of the Switch 2 on April 2, the same day Trump stood on the White House lawn with a poster board full of new tariffs. Two days later, the Japanese game giant said it would pause U.S. preorders of the Switch 2 on account of those tariffs. My kids, and their friends, were crestfallen and confused.

The Switch has been a runaway success, a combination of hand-held device and TV game console, selling 150 million units worldwide in eight years. The $450 Switch 2 is supposed to be Nintendo's big new move, an opportunity to double-down on new releases of "Mario Kart" and other Nintendo-exclusive megahits, while giving fans many of the power-hungry games previously only available on Xbox, PlayStation and PC.

Trump's tariffs could impede that plan for global videogame domination. Some of Nintendo's consoles are assembled in China, which currently faces U.S. import tariffs of 145%. Others are made in Vietnam and Cambodia, whose U.S. tariffs could approach 50% but, for the next few months, are just 10%.

These rapidly shifting tariffs put Nintendo -- and every other maker of consumer electronics -- in a precarious position: How are they supposed to figure out a price that accounts for tariffs but doesn't scare away buyers?

A spokesperson for Nintendo of America said the company had put off preorders "in order to assess the potential impact of tariffs and evolving market conditions." On Friday the company announced preorders would go live May 9, just a month later than promised. The original price and June 5 launch date remains unchanged. The boys are elated.

This isn't just about one beloved cultural touchstone -- Nintendo has been called the "Disney of Gaming" -- but the pipeline of all consumer electronics to the U.S. Many TVs and laptops will become much more expensive, and some might cease to be available here at all.

'Declared value'

Shipping data suggests that Nintendo has long had a sophisticated plan to remain nimble in the face of a trade war, but their costs are rising, on account of tariffs, regardless of the company's path.

It's unclear what proportion of Nintendo's global manufacturing happens in Vietnam versus China. But the company had already made a big shift away from China for U.S.-bound consoles, apparently in anticipation of potential tariffs, according to customs data crunched by David Gibson, a senior analyst at Sydney, Australia-based financial-services firm MST Financial.

In 2024, 60% of Nintendo hardware -- including all original Switch consoles -- came to the U.S. from China. By March of this year, nearly 70% of U.S. units, most likely all Switch 2 models, arrived from Vietnam, he says. In the first few days of April, that figure was 90%.

Tariffs are based on an item's "declared value." For a Nintendo Switch 2 imported from Vietnam, that's $338, based on Gibson's analysis. During the pause on "reciprocal" tariffs, that means a 10% U.S. import duty, so around $34 for every Switch 2. Should the pause end in 90 days, a rate of 46% on goods from Vietnam would mean Nintendo would have to pay about $155. Passing that charge on to American buyers could mean a price tag of $605.

Gibson says that by the end of February, there were already 746,000 Switch 2 consoles in U.S. warehouses, safe from any tariffs. He projects that in the month Nintendo finally starts selling the console in the U.S., all 1.7 million units will be ones that arrived before the tariffs took effect.

Doubling prices?

The bad news is, if tariff winds change again, Nintendo might have no choice but to charge fans more in the future. Even before all the tariff talk, many critics were aghast that the Switch 2 would cost $450 when the original Switch cost $300. That already puts the device into the same price range as the latest Sony PlayStation and Microsoft Xbox. And unlike phones, which can be subsidized by mobile carriers, the Switch 2 is a nice-to-have whose early buyers are kids and families.

Nintendo's spokesperson declined to comment on the company's future pricing plans or its manufacturing and inventory management.

The company's quarterly earnings reports indicate it carries billions of dollars in inventory, both parts and finished consoles. As tariff rates for different countries change, sometimes from one day to the next, Nintendo could redirect streams of parts to plants in different countries for final assembly, says Gibson.

Trump's tariff goal is to push firms to shift assembly to the U.S., or to Mexico, where we still have a free-trade agreement. For Nintendo and other electronics companies, that may be impossible. As with Apple's iPhone, the Switch 2's components can only be sourced from a select few countries -- displays from Japan, microchips from Taiwan. And there's no credible scenario where every single component is built in North America, even if import tariffs were 1,000%.

So, is there an upside to all this? Yes, I got a chance to discuss economics with my boys -- who quickly reminded me of the substitution effect. The moment I told him how much the price of a Switch 2 might go up, my youngest proposed that they might as well buy a used Xbox instead.

Write to Christopher Mims at christopher.mims@wsj.com

(END) Dow Jones Newswires

April 11, 2025 13:10 ET (17:10 GMT)

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