This story was reported in collaboration with Provide Chain Dive, an award-winning publication for information and traits shaping provide chain administration.
When Nintendo unveiled particulars about its extremely anticipated Swap 2 console on April 2, little did it know the day can be a turning level in world commerce.
Simply hours after the sport trade large confirmed off the successor to its hit Swap console, President Donald Trump laid out plans to implement common reciprocal tariffs.
Trump referred to as for a baseline tariff of 10% and better duties on quite a few international locations, instantly sowing uncertainty for the June 5 launch of the Swap 2.
Japan-based Nintendo at present produces lots of its U.S.-bound items in Vietnam, with another manufacturing in China, in response to Daniel Ahmad, director of analysis and insights at Niko Companions.
Underneath the Trump administration’s authentic reciprocal tariffs announcement, imports from Vietnam would have been hit with a 46% tariff beneath Trump’s authentic reciprocal tariffs — among the many highest charges of any nation.
Since Trump’s announcement, the U.S. paused some duties and supplied exemptions for sure product classes, even reaching a 90-day truce with China, which at one level confronted tariff charges of not less than 145%. Whereas the 2 international locations have since reached the framework of a deal, imports from China would nonetheless be topic to 55% tariffs beneath the proposed pact, Trump mentioned earlier this month.
Amid the turmoil, Nintendo went by means of with its June 5 launch date. However it begs the query: How have fluctuating commerce relationships impacted the corporate’s U.S. rollout? And what challenges would possibly it face sooner or later?
A managed launch
Regardless of a couple of non-tariff associated hiccups, the preliminary rollout of the Swap 2 has been profitable, promoting greater than 3.5 million models its first 4 days in the marketplace, in response to Nintendo.
Many consoles have been secured by way of pre-order, regardless of Nintendo initially delaying them in response to the brand new tariffs unveiled by the Trump administration in early April. The pause — which the corporate lifted April 24 — was a short-term play, nevertheless.
“Simply pausing pre-orders, however not doing anything, simply buys you time to look at,” mentioned Joseph Fitzgerald, managing director and associate at Boston Consulting Group.
Though Nintendo went full steam forward with its plans following the pre-order pause, many shopper items corporations have been taking extra long-term wait-and-see approaches to tariffs, with some stockpiling stock to delay extra drastic actions.
It’s unclear how Nintendo dealt with the preliminary tariff shock past the pause, as the corporate didn’t reply to a request for remark. Nevertheless, in response to Sally Peng, senior managing director and chief of export controls, sanctions and commerce for the Asia-Pacific area at FTI Consulting, it could have constructed up a certain quantity of Swap 2 stock forward of launch to make sure it might meet the preliminary rush.
Strategizing for the long run
There isn’t any fast repair to stave off the impression of tariffs for shopper electronics makers like Nintendo, nevertheless.
Simply transferring a single firm’s manufacturing operation can be difficult sufficient, in response to Fitzgerald. It takes roughly 9 to 12 months to maneuver manufacturing to totally different geographies, he mentioned, and that’s simply the beginning. Corporations usually wish to be utilizing a facility for 5 to 10 years to be assured it may meet demand and high quality requirements sufficiently for a tool just like the Swap 2, he added.
Regardless of the extent of complexity required to shift manufacturing, shopper electronics makers in North America are placing numerous “energy” into rebalancing, Fitzgerald added. Places which are receiving essentially the most consideration embody Latin America, japanese Europe and international locations in Southeast Asia past China.
Shifting manufacturing to the U.S. is an alternative choice, however issues stay even when an organization like Nintendo have been to put money into such a transfer.
“You find yourself having to have this dialogue round, hey, are you able to additionally mirror our provide chain on this location, or are you going to proceed to offer from an outdoor america location, and what’s our value distinction?” Fitzgerald mentioned.
Relocating an organization’s personal manufacturing footprint is difficult sufficient. However sport console makers depend on hundreds of parts and coordinate with giant associate ecosystems to make units that may be bought at consumer-friendly costs.
“That Tier 2, Tier 3 alignment in these places is de facto the largest factor that’s beneath menace while you’re type of vacillating in coverage,” Fitzgerald mentioned.
The whole provide chain prices of various tariff methods will decide which long-term gambits electronics producers make in response to a shifting world commerce setting. These line objects embody procurement, logistics and labor prices, amongst others.
“So, if we have a look at all these three prices collectively and collectively as a landed value, it’ll be a lot more healthy to make your resolution in occasions of uncertainty, which is type of the understatement of the 12 months,” FTI’s Peng mentioned.
There’s some precedent for efficiently finishing such a provide chain retooling, in response to Peng, who highlighted attire and footwear as a sector that’s forward of many different industries on this regard.
“Very a few years in the past, they already found out that aside from labor prices, responsibility prices or tariff prices are a giant a part of their whole value,” Peng mentioned.
The true problem comes subsequent
Though Nintendo weathered the tariff onslaught through the Swap 2’s launch, the actual take a look at for the console’s first 12 months lies within the months forward.
Like different shopper items makers, Nintendo might want to herald orders through the summer season’s peak delivery season to arrange for vacation demand. As a result of present commerce setting, that can imply both rush ordering to make the most of the Trump administration’s present tariff reprieve or consuming larger delivery prices when and if at present paused tariffs return into place.
Picture by Joe Raedle by way of Getty Pictures.
The vacation season drives {hardware} and software program gross sales for the online game trade. Gross sales within the fiscal quarter ending Dec. 31 accounted for 37% of Nintendo’s world gross sales in 2024, per Provide Chain Dive calculations. Roughly 60% of U.S. income for the corporate, which doesn’t publicly report regional earnings, comes from gross sales on the finish of the 12 months, former Nintendo of America President Reggie Fils-Aimé mentioned in 2018.
Nintendo is anticipating to promote 15 million models of the Swap 2 globally over the following eight months. However to achieve that mark, it should cope with a possible return of the Trump administration’s country-specific reciprocal tariffs subsequent month to satisfy its U.S. gross sales forecast.
Tariffs on imports from China have been lowered till mid-August whereas different country-specific duties are paused till early July. Even with the reprieve window, which has led to a pickup in shipments, imports are anticipated to drop 6.2% 12 months over 12 months in June and eight.1% YoY in July, per the Nationwide Retail Federation, with much more drastic reductions anticipated for the remainder of the 12 months.
Decreasing shipments as a result of larger tariffs or slower demand gained’t create a silver lining of saved prices for Nintendo, although, in response to Peng. New console rollouts are deliberate to this point prematurely that the corporate doubtless already has the fabric to supply extra consoles, Peng mentioned. In the meantime, manufacturing in China and different international locations in Southeast Asia focused by Trump’s tariffs has slowed down within the first half of 2025, she added.
“So, we’re not simply speaking about completed items not having the ability to ship. They already sunk numerous prices into making ready the fabric or securing the fabric,” Peng mentioned.
Given the tariff-driven uncertainty, Nintendo and different shopper electronics makers are being compelled to make atypical choices throughout this time of 12 months.
“How aggressive do I’m going by way of chasing these again orders? And do I solely plan to meet provide for, say, 30 days at a time, which inherently limits my max capability that I can fulfill,” Fitzgerald mentioned. “So any launch, I’d assume, has an extended backlog achievement interval as a result of corporations are going to inch alongside in that achievement course of as a result of uncertainty.”
The potential Nintendo benefit
Nintendo has remained assured in its skill to satisfy demand within the face of manufacturing challenges, whilst tariffs proceed to rankle provide chains. Whereas not resistant to duties given its manufacturing footprint in Vietnam and China, in addition to being a Japan-based firm, Nintendo holds a singular place within the online game trade.
Since Nintendo’s success with the Wii console, first launched in 2006, the corporate has damaged away from its main rivals (Microsoft and PlayStation) with a definite improvement technique.
During the last 20 years, Nintendo deprioritized processing speeds and graphical constancy for distinctive {hardware} mechanics equivalent to movement controls and portability. This strategy is a part of a extra family-focused product technique for Nintendo. In distinction, Microsoft and Sony proceed to primarily goal the 18-34 demographic.
Due to its technique — and its online game consoles usually— there’s a built-in demand safety, even when tariffs gasoline larger costs. Nintendo has dedicated to its initially introduced value of $449 for the Swap 2, nevertheless it mentioned console equipment will expertise value changes as a result of “modifications in market circumstances.”
“Video video games are distinctive as a result of there’s solely certainly one of that platform, proper? And also you’re not likely competing [with other businesses],” Fitzgerald mentioned. “They’re a class of 1 unto themselves.”
That is very true for Nintendo, whose best-selling first-party video games are unique to its console. Sony and Microsoft, in the meantime, have launched first-party titles on different platforms.
As well as, as a result of Nintendo’s console launch cadence is just not on the identical cycle as Xbox and Ps, which regularly launch new generations on the identical time. Subsequently, it may stand alone among the many massive three console makers this 12 months.
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