New Tariffs On RPGs Printed In China

ICv2 is reporting on new tariffs on imports to the USA from China, which include various categories of items including toys, comics, and games... including tabletop RPGs. The tariffs are up to 25%. Many game companies print RPG books in China, so this will affect them.


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The New York Times reports on it in more depth.

So, here's a simple breakdown of it as I understand it -- while tabletop games are not currently under any tariff, they will be affected by the 25% rate coming in a couple of months. There's a grace period of about three weeks for items in transit.

The tariff doesn't necessarily mean the games will cost 25% more. It's based on the manufacturing and shipping costs, which are only a part of the cost of producing a product. The price increase to consumers, therefore, will likely be substantially lower than 25% (although it's completely up to the companies how they handle it - some might even just absorb it, while others will pass it on).

It'll likely start showing in prices in games in Autumn or so.

This, of course, only affects games printed in China and shipped to America. And lost of other things, apart from games!
 
Russ Morrissey

Comments

R_Chance

Explorer
A related but slightly different use of tariffs would be as compensation for "unfair competition." For example, the EU has stricter laws regarding treatment of farm animals than the US. This means that raising animals for food is more expensive in the EU. It would be totally fair for the EU to levy tariffs on meat imported from the US to compensate for this - and it makes little sense for the EU to say "We don't condone animals being treated this way, but we'll buy your meat anyway."
That's a fairly standard reasoning for using tariffs. Worker safety costs have come up as well in tariffs.
 

R_Chance

Explorer
So that means that unless China is putting out domestic RPGs, this isn't going to be doing anyone any good on that particular front?
Whether it is printed in China or printed in the U.S. (where it will cost more than pre tariff China printing costs) it means higher costs for U.S. consumers. The only way out of that is to find another nation to print them in where costs are lower (and not subject to tariffs). If a third nation does the printing it harms the Chinese printers, and does nothing to boost the U.S. printing industry. So, bonus for a third country (and maybe U.S. consumers). The question is whether there exists sufficient capacity in a third country that has lower printing costs. I imagine the RPG industry will be exploring that possibility...
 

Dannyalcatraz

Moderator
Staff member
One thing about tariffs is certain: they are rarely effective when levied against an economy roughly equal in power to your own. Kinda like nukes, in situations like USA vs China- the #1 & #2 economies in the world right now- tariffs are the M.A.D. solution to an economic issue.

FWIW, the nonpartisan Economist magazine threat report in mid-2016 listed a possible Trump presidency as one of the top threats to the global economic situation, precisely because of...well...a host of misunderstandings about international commerce. This Tariff War is a great proof of concept for their writers.
 

Sword of Spirit

Adventurer
Whether it is printed in China or printed in the U.S. (where it will cost more than pre tariff China printing costs) it means higher costs for U.S. consumers. The only way out of that is to find another nation to print them in where costs are lower (and not subject to tariffs). If a third nation does the printing it harms the Chinese printers, and does nothing to boost the U.S. printing industry. So, bonus for a third country (and maybe U.S. consumers). The question is whether there exists sufficient capacity in a third country that has lower printing costs. I imagine the RPG industry will be exploring that possibility...
Right. What I meant was that China isn't going to get any benefit out of this change (as far as it relates to RPGs), unless they are making their own to compete.
 

stargazera5

Explorer
Crystal Frasier, formerly of Paizo Publishing and currently part of Green Ronin, had some thoughts on this:
There are two big assumptions in Crystal Frasier's thoughts which have not fully held true in other tariff increases to date:

1. The Chinese printers won't cut their prices to keep their market share.

2. Other countries won't become the low cost printer for less than the $2 increase.

This isn't the first round of tariff increases Trump has done, and both have happened in the other increases with a fair amount of regularity. Crystal Frasier is looking at the worst case scenario. While that is obviously worth looking at the worst case, we also have to keep in mind that it is not the only scenario likely to happen.
 

dragoner

Dying in Chargen
No American printer is going to invest capital in developing operations based on an artificial barrier to trade that can be swept out from under them a year later. Most likely results will be rising costs on printed RPG products, which will make them in turn rarer. If we were talking about something like steel, then there would be transhipment or 2nd source suppliers, just to fill the gap.
 

billd91

Hobbit on Quest
There are two big assumptions in Crystal Frasier's thoughts which have not fully held true in other tariff increases to date:

1. The Chinese printers won't cut their prices to keep their market share.

2. Other countries won't become the low cost printer for less than the $2 increase.

This isn't the first round of tariff increases Trump has done, and both have happened in the other increases with a fair amount of regularity. Crystal Frasier is looking at the worst case scenario. While that is obviously worth looking at the worst case, we also have to keep in mind that it is not the only scenario likely to happen.
China's got its own economic issues right now that will probably affect both of those ideas. They may not be able to cut their prices to keep marketshare - or they might, it's hard to tell. But there have been quite a few rumblings in the Chinese economy about segments where the workers are restive because of low pay. Cutting deeper into their prices won't exactly help that.

But as far as other countries stepping up, that takes time and it takes investment that may not be there. One reason the Chinese economy has done so well with respect to the American economy is because we set up permanent trade relations with them back in 2000. By making the trade relationship permanent rather than renewable on an annual review basis, we enabled stable long term investment to build the manufacturing and printing infrastructure to exploit their cheap wages and lack of environmental protection that companies benefit from now. If there aren't other countries immediately ready to pick up the slack, the effects may be felt for quite a few months.
 

Dannyalcatraz

Moderator
Staff member
1. The Chinese printers won't cut their prices to keep their market share.
Yes and no.

I was talking about this with someone in a non-gaming business that imports a lot of Chinese printed/produced goods. He said that the majority of his suppliers did exactly that for the first round of tariffs.

He was not expecting them to do the same with the freshly boosted rates, though.
 

Elfcrusher

Adventurer
Hopefully companies will either move some of their business back stateside or China will negotiate. Either way would be good for our economy.
According to the reporting I've seen (e.g., here) U.S. companies are moving their manufacturing to foreign countries other than China. Mexico, especially, is benefiting. But tariffs would, on average, have to rise to 100%, and be imposed on all countries, before it would make economic sense to invest in domestic infrastructure. And then the only market for those products would be domestic, as well.
 
Big companies like WotC/Hasbro will just absorb the extra cost. After all, when Amazon is selling a $50 book for $30-35, I doubt they are taking a loss on that book, so there is plenty of room between wholesale and retail price for the big boys to not raise prices. But those $50 core books from smaller, indie publishers may soon be $55 instead to cover their increase in cost. And the bad thing is, while these tariffs may go away in a year or two, that price increases from smaller publishers may not.
 

ced1106

Explorer
From Reddit: "I am a licensed Customs Broker in the US. I literally deal with these tariffs ALL day long. People sit here and complain that "Well a 25% price increase is going to kill businesses".

Here is some news for you to get a better perspective on this situation: So let's say a game publisher has a game with an MSRP of $60.00. The actual cost they declare to Customs is around $8-$11, on average. The rest of the cost goes to paying for things like ocean freight charges (which are non-dutiable and thus, the tariffs do not impact), and warehousing and trucking and profit and labor costs and other local charges, none of which are dutiable and thus the tariffs do not affect. That means, on a game that has an import cost of $8.00, the tariff adds $2 to the price of importation of that copy of the game. $2 to a $60 game is a total increase of 3.33%. That sort of cost can be absorbed with barely any notice to the consumer.

And if you think I making things up, these tariffs have been in place for virtually everything from China since September. How many things have you noticed huge cost hikes on? Anything that jumped 25%? Any small businesses that were thriving prior to Sep 4 that are now out of business? Most people here seem to think of this like a VAT, or a Value Added Tax, which is a flat tax added at the time of sales tax, which means you are taxed on all the freight and trucking and warehousing and whatever charges. That is not how tariffs work. So that $95 copy of Gloomhaven, were it imported from China after these tariffs, would (assuming the cost was fully passed on) cost about $98-100. Again, not a 25% cost increase. And the reality of this is that the additional tariffs they take in from China and a few other countries help offset the ridiculous runaway spending that Congress does so that it offsets some of the money we end up borrowing from China to pay for their nonsense."

https://www.reddit.com/r/boardgames/comments/boej7d/toys_board_games_dice_included_in_proposed/enhgp0r/
https://www.reddit.com/r/boardgames/comments/bphyo3/board_games_are_about_to_be_hit_with_a_25_tariff/
 

Staffan

Adventurer
I posted this as a comment to the Reddit post, but I think this place could use it as well:

I don't intend to cast aspersions on the Reddit poster's expertise regarding tariffs and customs, but I think they're missing how games are priced and sold.

Let's say I pay $60 for a board game at my FLGS. And again, let's say that that game is manufactured in China at a cost to the publisher of $8, including shipping. So a 25% tariff should increase the cost to the publisher by $2, so my cost should go up to $62 assuming the cost is passed on, right?

Wrong. Because games generally aren't priced based on all the stuff that happens along the way to the customer - that's all simplified to a general markup at each step along the way. The distributor sells the games to the retailer at a discount based on MSRP, and buys from the publisher at a steeper discount. So the distributor might buy that game from the publisher for $15 or so.*

If the publisher sells the game for $15, and it costs $8 to have it made and shipped from China, that leaves $7 for the publisher's own costs - R&D, customer service, marketing, and a bit of profit. Assuming that the publisher decides to pass on that cost because they still want the same profit, that means that they will have to raise the price the distributor pays to $17. And the distributor and the retailer are going to keep the same markup, so the price for the consumer will be $68. Or probably $70, because nothing's priced $68.

So yeah, that 25% tariff doesn't turn into a 25% price increase for the consumer. It'll probably be more like 15%.



\* I don't know the exact ratio - the 25% figure comes from an article about pen-and-paper RPG pricing that's about 20 years old, so it might be different for a board game made today. But the point stands regardless of the ratio - a cost for the publisher of $X is multiplied by some factor by the time it gets to the customer.
 

jmucchiello

Adventurer
The main issue some book producers have is books tend to have their prices printed on them. Makes raising the price of the book harder.
 

LuisCarlos17f

Adventurer
Soon we will see more news about China, for example complains and a boycott against Chinese industry for the pollution they cause (do you remember the ozone hole? now it is their fault), and about that stupy censure. They don't like fiction with time travel, showing corpses or pre-Mao Chinese History. This may mean fantasy RPGs set in a fantasy China could be forbidden. Maybe the Chinese economic burst and companies would rather other zones.
 

mopa9000

Villager
Soon we will see more news about China, for example complains and a boycott against Chinese industry for the Youjizz Pornhub Tubegalore pollution they cause (do you remember the ozone hole? now it is their fault), and about that stupy censure. They don't like fiction with time travel, showing corpses or pre-Mao Chinese History. This may mean fantasy RPGs set in a fantasy China could be forbidden. Maybe the Chinese economic burst and companies would rather other zones.
Hopefully companies will either move some of their business back stateside or China will negotiate. Either way would be good for our economy.
 
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Eltab

Villager
The book "Making It In America" (the author owns a furniture factory) has a chapter describing what US manufacturers were being offered under the Free Trade treaties.

When the foreign manufacturer has a guarantee from his government of financial support to cover any/all losses until the US manufacturers give up or go broke, a tool like tariffs - which drive consumers to seek other sources of supply - are one reasonable response. Being a good bad or indifferent tool, is a discussion for another website.
 

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