Trump Tariffs Hit Mushroom Kingdom
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Over the past few months, gamers have been anxiously awaiting an important new release, the Nintendo Switch 2. For months, there's been leaks from different suppliers, case manufacturers saying, oh, it's coming, it's coming. And, you know, there's sort of this fever pitch of people getting excited for the release. That's Jason Kebler, a co-founder of 404 Media, who wrote about the Switch 2.

Last Wednesday, the very same day that President Trump announced his slew of tariffs, Nintendo made it official. And on Liberation Day last week, Nintendo officially announced the device in the morning and said it was going to cost $449 and that pre-orders for the Switch 2 were going to start on April 9th. Gamers were psyched, but they didn't love the price tag.

And so there was this huge mix of excitement that this thing was finally real and that it's coming soon. And at the same time, I think people were a little upset about the price because the original Switch, I believe, was $299. And the announced price for this was $449. And so people were saying, oh, well, this is already more expensive than we were expecting. And they let the company know.

Nintendo did like a live stream a few hours after the initial announcement and all of the live chat comments were like, lower the price, lower the price, it's too expensive. Even if you're not a gamer, it's worth paying attention to the story of the Switch 2 because it's a fascinating case study in how tariff policy changes what we buy and how it's made.

which is a Japanese company, manufactured most of the Switch Ones in China. And there

There was reporting ahead of the announcement that a lot of the manufacturing had been moved to Vietnam and Cambodia, in part because Nintendo anticipated big tariffs on China. And then, you know, hours after it was announced, these massive tariffs were announced on Vietnam and Cambodia. And so it's one of those things where it's like Nintendo was trying to outmaneuver the Trump administration or trying to say like,

you know, we're going to move our manufacturing so that we're not so reliant on China. And then suddenly the tariffs are on everyone. And so their plans kind of are totally up in the air. Today on the show, how the switch to made tariff policy feel real and risked angering a key block of voters. I'm Lizzie O'Leary, and you're listening to What Next TBD, a show about technology, power, and how the future will be determined. Stick around.

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For people who aren't gamers and want to understand kind of where Nintendo sits in the firmament of the industry right now, how would you describe the company? Yeah, so I think a lot of people probably know Nintendo for like Mario and Zelda and Pokemon and sort of these beloved video game franchises. And it's really funny because if that's your...

knowledge of the company, it's pretty much the same. It's like Nintendo differentiates itself from Sony and Microsoft because it has all of this first party IP, meaning they are the only place that you can find the new Mario game, the new Zelda game, the new Pokemon game. And they've really been living off of these games and these franchises that they've been making for decades. And so the Switch franchise

was its most recent console. And before that was a console called the Wii U. And the Wii U was like a huge flop. It was not very popular. It didn't last that long. It sold only 13 million units, which for a video game console is really bad.

There were all of these articles and just like video game prognosticators saying like, oh, has Nintendo lost a touch? Like, is it no longer that relevant? I think there were even people who were saying like, should Nintendo get out of the hardware business and just start making Mario games for the Xbox or for the PlayStation?

And since that time, they had this huge hit with the Switch. They've also got like Super Nintendo World at Universal Studios. They've started turning some of their franchises into movies. So you have things like the Super Mario movie, which is like a huge, huge, huge hit. Yeah, my four-year-old knows who Mario is. He's never played a game. Yeah, and I mean, they're still like living off of those franchises and they're just timeless franchises that people really love. But it's like the company is doing extremely well.

Gaming consoles are typically loss leaders for the big gaming companies. Sony and Microsoft are willing to eat the cost of some PlayStations and Xboxes because they know they're going to make their money back selling games. But Nintendo is different. Jason says they just aren't as willing to lose a lot of money on hardware. They also hadn't had a big console release since the original Switch, which came out in 2017.

The Switch came out in the first Trump administration. And I wonder if you could talk to me a little bit about what Nintendo learned about manufacturing and supply chain in that Trump 1.0 experience and how they began to apply it to the Switch 2.

Yeah, so the first switch was made by Foxconn, which is the Taiwanese company that also makes iPhones and lots of other electronics. And almost all of their factories at the time were in China. And the Trump administration announced, you know, a variety of different tariffs on China during the first administration. The Biden administration kept those tariffs in play.

And then as Trump was campaigning, he was saying, you know, like, I'm going to tariff China even more. I'm going to have more tariffs across the board. And a lot of manufacturers in response to that first round of tariffs during the first administration said,

began to look for, I guess I would call it loopholes, but more like alternatives to China. And so a lot of Chinese companies shifted a lot of manufacturing to Vietnam, to Cambodia, to Mexico. And Nintendo is a Japanese company, but it was using Taiwanese and Chinese manufacturers. But companies learned that they could kind of get around the Chinese tariffs if they

did the manufacturing in countries like Vietnam or in Cambodia. And we've seen not just Nintendo do that, but Apple has done that, like a lot of other companies have done that. And this was looked at as the United States kind of taking some of its eggs out of the China basket and placing them elsewhere, right?

But then there's another way of looking at it. And I think the way the Trump administration looks at it is it's a way to avoid tariffs. And so the most recent announcement, these, you know, the Liberation Day announcement,

is designed to close some of those loopholes. And, you know, Nintendo was able to sort of circumvent some of those tariffs the first time around. And then Trump comes out and announces these like 48% tariffs, like 50% tariffs on Cambodia and Vietnam. And that kind of blows up their plans.

Yeah, I was wondering if you would say that it's fair that Nintendo felt prepared in as much as one could feel that way for tariff policy in a second Trump administration because they moved a lot of pieces around on the board.

Yeah, Nintendo very famously doesn't talk to the press very much at all. But you can sort of look at their actions and guess what they're trying to do. Like there's not necessarily a reason to move manufacturing to Cambodia and Vietnam unless you're trying to avoid some of these tariffs. And so I spoke to a bunch of international trade experts, you know, people from Princeton, people from UCLA, USC, etc.

And they looked at Nintendo's actions and were saying like, clearly this was a move designed to stay a couple steps ahead of the Chinese tariffs. And a lot of American manufacturers have been doing that. And a lot of international manufacturers have been doing that where they'll keep some manufacturing in China, but then they'll have like this parallel manufacturing ecosystem in Vietnam or Cambodia in order to, uh,

you know, be able to scale up or down manufacturing a specific country according to whatever tariff policy is, is happening that day. I mean, I think you'll talk to any, if you talk to any supply chain expert or any logistics expert,

manufacturing and industry works on really long timelines, and it also works on stability and predictability. And so building a new factory is a big deal. It takes years to do. You have to train people how to do it. You have to figure out how to align these very complex global supply chains. And so I think that Nintendo and other companies have been banking on this idea that

They can move manufacturing to Cambodia and Vietnam to avoid tariffs. And suddenly they're dealing with huge tariffs there. It's not it's not a good situation. After the break, Trump takes switch. This episode is brought to you by Discover.

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You know, President Trump was talking about, oh, well, we want a supply chain made in the U.S., talking about like tiny hands and tiny screws. It seems ludicrous to me to imagine electronic hardware being made in the United States. Is it even possible? It's not possible. And this is something that I've written a lot about. You know, it's possible in the longer term.

But we're talking about a scale of years, a decade longer before we can have like fully made in the United States electronics that are able to compete with what

what we're seeing made out of China right now. You know, there is one company that's making a phone that's totally made in the United States called the Liberty phone. And it uses hardware that's several years old. It costs $800 more than the version of that exact same phone that's made in other countries. And then you look at things like supply chains and for cutting edge electronics, like the iPhone, like the switch to,

you are talking about a device that has dozens of different components in them and hundreds of different suppliers, all sorts of different minerals and metals that go into that. And a lot of those raw materials come from places that are not the United States. And that's because, you know, mining for rare earth metals is,

is environmentally destructive. There's only one rare earth mine in the United States that's in California. It only opened up recently, but a lot of these mines are in other countries. A lot of the component manufacturers are in other countries. I just wrote an article about where Apple gets all of its materials and where its suppliers come from. And there's something like 200 different mines on it. Only 20 of them are in the United States. So we're talking about like

a full reimagining of the global supply chain. And we're also talking about every company trying to do it all at once. And so it's just like, it's going to be

long and painful process if we go down that road. I think that reshoring some manufacturing to the United States is a good idea. I think it's possible that you could assemble a Nintendo Switch in the United States or assemble an iPhone in the United States, but all the components that are inside of it, it's going to remain a global product and those components are going to be subject to all these tariffs.

If this week was any indication, the Trump administration's tariff policy might feel like a demented roller coaster. But for manufacturers, the number one thing you want is predictability. If you're a brand trying to bring a product to market and sell it to American consumers right now, you're dealing with some very confusing policy terrain. And how rough that ride is depends in part on how much shock you can absorb.

A company like Apple or Nintendo is so large that it can absorb tariff costs to some extent. Like a lot of these companies are so reticent to increase prices on goods that are very stable. And what I mean by that is like,

Apple has been selling iPhones at a specific price since the last model. I don't know if we're going to see Apple suddenly bump up prices before the new model is announced. They're going to try to swallow that for a little while. They're probably going to try to swallow that for a little while just because that's how these gigantic companies work. It's like Nintendo announced this price at $449.00.

It's really an unknowable question, or at least I don't have the reporting to know whether Nintendo priced in the possibility of tariffs into this equation. And so, you know, this is a product that hasn't been released yet. But I think for the products that are on the market, you might see these really big companies just decide to bite the bullet and say, we want to keep our customers happy. We want to make sure that this, you know, we can compete on price still.

And then you'll see prices rise for the next model of the iPhone, for example. I think that calculus is completely different for smaller companies. There's a company called Framework, which sells repairable and upgradable laptops. It's a relatively small laptop manufacturer that manufactures laptops in Taiwan. And they announced that they are going to stop selling some of their models of laptops to Americans because...

Any tariff on Taiwanese goods is going to mean that they're going to take a loss on their products. And so when you think about like smaller manufacturers, this is a lot more existential for them in the short term, that uncertainty, because I don't know, like Apple and Nintendo can spin up entirely new supply chains, entirely new manufacturing products.

capabilities all around the world. They can have backup plans. But if you are a small manufacturer that's just trying to get your product off the ground or your company off the ground, you're not going to be able to suddenly start manufacturing in the United States if you've already invested in manufacturing in Taiwan or Vietnam or Cambodia. Right. I mean, I'm looking while I'm talking to you, Apple's got $54 billion cash on hand. Like,

They've got a cushion. Yeah, and I've seen a couple, you know, like really small manufacturers. Like there was a guy in the New York Times the other day who sells like a small kitchen gadget that he's manufacturing in Taiwan saying –

I was only able to start my company because it cost me like $10,000 to get it off the ground. If I were to do this in the United States, it would have cost me hundreds of thousands of dollars to set up a factory here and I would have never done it. And I still can't move to the United States because I just don't have the cash reserves to do that. I want to talk about customers a little bit. Yeah.

There is a very vocal portion of the gaming community that skews young and male. And my producers are underlining that is not necessarily the case with the Switch vis-a-vis other games, but...

I still think it's fair to say that things that happen in the gaming world more broadly might get through to certain consumers who went for Trump by, you know, a 30-point swing. And so I guess I wonder, how are consumers receiving all of this news? And does it make a difference to their everyday lives?

Yeah, I mean, I'm going to paint with a very broad brush here. You know, gamers are not a monolith. I want to start there. That was the note that my gamer producers were like really handing to me. I mean, it's true. But even the Nintendo Switch, you know, it skews a little bit younger. It skews a little bit more male than just like the average 50-50 product. And

Not all gamers are super hardcore, but there's a hardcore gamer contingent of voters, of people who

I mean, I hate to say this, but people who might not care about some of the other things the Trump administration is doing, they might not be totally tuned into, you know, ICE deportations and what Doge is doing, cutting government funding, things like that. But if they've been really looking forward to the Nintendo Switch 2 at a specific price and suddenly they can't even order it.

They might start asking questions about why that is. And, you know, I think it really does move the needles, like not a one to one correlation, of course. But we've really seen these sort of gamer voice. It's like, I don't know, like when we write articles, we're like, let's not piss off the gamers. Like if you've pissed off the gamers, that is not good.

good for you. It's like they're very passionate. Well, does Trump risk pissing off the gamers? I guess is what I want to know. He's pissed off the gamers for sure. They are very mad. They're very, very mad. And it's like, it's possible that this blows over. It's possible that, you know, now that he's announced a pause on the tariffs that Nintendo will say, okay, we are going to

resume pre-orders and you know the launch will be in i believe it's july but the launch will be in a few months and this will all blow over but in the short term

I mean, you had people who've been saving up their money for months, who've been waiting for this announcement for months, who then had the ability or saw the ability to pre-order. There were people setting their calendar alerts saying like, okay, time to log in and try to pre-order my Nintendo Switch. And suddenly Nintendo is saying like, no, we're not doing this. And the reason Nintendo...

is delaying pre-orders is because of the tariffs, a decision that Trump made. There's no other reason for it. People are very mad. If you go on Reddit and you go to the Nintendo Switch subreddit, every post is about the tariffs. Every post is about the cost of the Nintendo Switch. Every post is about, I didn't think that this would affect me and now it's affecting me. Jason Kevlar, as always, it's great to have you on. Yeah, thank you so much for having me.

Jason Kepler is a co-founder of 404 Media. And that is it for our show today. What Next TBD is produced by Patrick Ford. Our show is edited by Evan Campbell. Slate is run by Hilary Frye.

And TBD is part of the larger What Next family. And if you're looking for more Slate podcasts to listen to, check out this past Tuesday's episode of What Next. They talk with Rolling Stone writer C.T. Jones about Jonathan Majors and Hollywood's obsession with creating a male redemption story. We will be back on Sunday with another episode about what the heck is going on with TikTok. I'm Lizzie O'Leary. Thanks so much for listening.