This is a blog about history, board games, and history in board games. That doesn’t mean it’s not political – history inherently is, and so are board games (particularly when dealing with historical subjects), but I usually don’t comment on current events. I’ll make an exception today to talk about a subject with a great impact on the board game business – the import tariffs imposed by the US government. After a quick overview of the situation, we’ll discuss if onshoring production to the United States is a viable solution, and what board game publishers can do to cope.
What is going on?
In early April, the Trump administration imposed import tariffs on goods coming from almost all countries to the United States. That means that when a US importer buys a good from abroad, they have to pay the tariff rate in addition to the price of good. Example: A coffee wholesaler in St. Louis buys coffee from Brazil worth $ 10,000. The tariff rate for goods from Brazil is 10%. The wholesaler will have to pay $ 10,000 to the Brazilian coffee company, and $ 1,000 to the US treasury. They will likely increase the price they charge the St. Louis cafés buying from them, and these will increase the price they charge their customers.
The tariffs announced typically ranged from 10% to 50%. After a bit of back-and-forth which indicated either a lack of strategic direction within the administration or its inclination to provide opportunities for insider trading, most of the tariffs have been put on hold until July. One major exception, however, are the tariffs on goods from the United States’s largest trading partner, China, which were raised multiple times and now sit at 145% (exceptions apply, for example, electrical vehicles from China face an even higher tariff of 245%). Example: A California board game publisher produces their games in China. A shipment worth $ 100,000 arrives. The publisher will have to pay $ 100,000 to the Chinese manufacturer, and $ 145,000 to the US treasury.
As you can see, that causes both short-term and long-term problems: Publishers need to have the cash on hand to pay the tariffs, which they likely did not expect when they ordered the shipment months ago, and they will have to adjust to a new world in which manufacturing in China is wildly more expensive than before.
Why would an administration raise the price of goods in such a way ? – One of the textbook sentences about tariffs is that they are enacted to protect domestic manufacturing, because the goods you produce domestically are exempt from the tariffs and thus are more competitive price-wise. Yet you cannot protect what you don’t have. In many industries, there is (almost) no domestic manufacturing in America, board game components being one of them.
Onshoring Board Game Manufacturing?
Now, could these industries be built from the ground up in America? Theoretically, yes. Practically, I am extremely skeptical about manufacturing board games in the United States.
First of all, shifting production is a difficult, long-term process even under the best of circumstances: It has taken Apple eight years to manufacture 20% of their iPhones in India – and that was a planned, voluntary move by an industry giant with unparalleled access to outside capital from loans and the stock market as well as sizable cash reserves. And still, it only amounted to 20% of the production of one product line.
Board game companies, on the other hand, are now being asked to move 100% of the production of (almost) all their products, on short notice, and, in most cases, with very limited cash reserves and access to outside capital.
Even if a company does not falter from the initial shock, it needs enough capital to either pay in advance for the much-increased cost of paying manufacturers in the United States instead of China – or invest even more to build its own line of production.
An even more decisive factor than cost is quality. American companies started to manufacture in China because it was cheap, but they remained there even as Chinese wages surged (at this point, China is solidly not a low- but a mid-income country) because the Chinese have developed a skill and experience at industrial tooling which most other countries don’t have – including the United States.
Right now, neither the machines with which you could mass-produce high-quality board game components like wooden bits or plastic miniatures nor the skilled workers to operate them exist (at scale) in the United States. The tooling machines are also not manufactured in the United States, so they would have to be imported from China or Europe – with the respective tariffs slapped onto them, of course. If the American companies would not want to learn to operate the machines from the manual and painful experience alone, they would also have to bring in workers from either China or Europe. That seems like another daunting prospect, as the current US administration is not keen on letting foreigners into the country, and as foreign workers might not want to go to the United States whose hostility to them seems assured, while their prosperity seems doubtful.
One possible reply to that could be to “de-bling” board games – fewer miniatures, fewer wooden bits, more simple cardboard counters. I am skeptical of that, too. It would shrink the market because a lot of people who are used to the component bonanza common to the board game releases of the last years would be uninterested in a visually less striking game. And according to Gene Billingsley, GMT Games used to print countersheets domestically until some years ago, but moved away from it because of the marked quality disadvantage compared to Chinese manufacturing.
The Way Forward for the Board Gaming Industry
One inevitable consequence is that prices will go up, and not only by the absolute value of the tariff slapped on the imported product, as distributors, game stores etc. need to maintain their profit margin (as they can buy fewer products, but still have the same fixed costs). As that also shrinks the customer base, most companies will likely look for a compromise in which publishers, distributors, game stores, and customers cover some of the cost increases.
That will likely also apply to board game buyers outside of the United States. The US is the biggest market for board games, so most publishers will need to be successful there in order to produce their games at scale. As game prices are usually not reflective of the exact cost to produce and ship a product to the individual customer (which fluctuates with exchange rates, shipping costs, local labor costs, etc.), but rather set from a mixed calculation, price hikes in the US might be flanked with price hikes elsewhere. That, of course, could have the ironic effect that the tariffs which were supposed to protect US manufacturing might make companies which mainly produce for other markets (say, Europe), comparably more competitive, lowering the US publisher’s share in those markets.
Board game companies might also move away from certain types of games (say, the precision-component heavy miniature fests) and more towards others (say, card games, whose components could be manufactured in other countries with lower tariffs or even domestically, and which are generally cheaper – an important consideration given that customers typically have a limited board game budget, and might also cut back on spending on such “luxury” items if they expect sinking real wages from an economic recession and inflation).
And, of course, there is the option to apply political pressure – reaching out their political representatives (and getting their customers to do so, too, which might be as simple as explaining the impact of the tariffs on the company to them). I am not a Washington insider, but it seems to me from the tariffs roller-coaster in April that the current administration does not have a fixed master plan on tariffs, and is rather seeing what sticks. With enough pressure from business and the electorate, the tariffs in their current form might not stick.
