Rowan, Rook and Decard
CREATOR
about 1 month ago
Project Update: Intermission: A General Note On The Whole Tariff Thing
Hi folks, Maz here.
As you’re probably aware, the US has announced new tariffs on almost every country in the world, including the ones where we make our games, and the ones where we could make our games in future. What this means is that for every item imported into the US, there will be an additional tax levied at the ports, based on where it was manufactured. For some countries that’ll be an extra 10% of their manufacturing cost; for others it’s up to 50%. Those are taxes paid to the US government, and they have a big impact on importers like us (and almost every other importer in the games business).
As I write this, it is super unclear what the impact will be for us, and for Hollows in particular. We are still waiting for clarity about what the actual rate will be for various territories once multiple tariff levels are combined, and for clarity about deeply wonky things like which HTS codes precisely are exempt and whether the implementation of those exemptions will be in line with the order as it’s written. We might be waiting for that for a while; the details of the legislation and how it’s intended to work in practice are not clear right now, not just to us but also to the experts we rely on to help us navigate global freight in calmer times.
In the meantime: work continues. We’re writing, editing (I now have strong opinions about the definition of the word "would"), playtesting and making art, as well as checking the headlines. We don’t think these tariffs are going to prevent anyone from getting their games; we’ve done a lot of work behind the scenes to build resilience against this scenario, and we’re hopeful that - relatively speaking - we’re in a better position to weather this than we’d feared.
But: that “relatively speaking” is doing a lot of work. Assuming that what we believe to be true about these tariffs remains true - and pending the massive impact this will have on global shipping, freight and US ports - we may have to raise shipping costs higher than we’d hoped, and there may be other knock-on effects too.
It’s too early to say exactly what we will do in response to these events. We expect the situation to evolve in the coming days and weeks; we’re monitoring it and we have contingency plans. If you’ve got specific questions, you’re welcome to ask them here, come to our Discord where we’re discussing this in more detail, or email [email protected]. We want to be very transparent and open about this; we regularly talk about how our business and the broader industry works in our Discord, and it’s been an active topic today. You’re welcome to join in.
A deeper dive
If you’re still unsure of how these tariffs might impact the games industry, Meredith Placko, CEO of Turbo Dork Paints and Steve Jackson Games, wrote a helpful and live explainer:
If you’re still unsure of how these tariffs might impact the games industry, Meredith Placko, CEO of Turbo Dork Paints and Steve Jackson Games, wrote a helpful and live explainer:
A company makes a product in, let's say, China. It costs them $3.05 to manufacture (not counting tooling fees, color process, freight). Say that company wants an 8-to-1 ratio (because they're thinking scale, and if they sell in distribution, that can take upwards of 65%-72% off MSRP). Now that product is priced, to consumers, at $25.00 (rounding up for easy maths).
Alrighty. $25.00 for the item. That's a reasonable price for a decorative bowl found at Target, a card game with some tokens, a baseball cap.
However, to make that product in China, we have to add 20% to the cost, because of tariffs. That now means it costs the company (not counting tooling, color process, freight) $3.66 to manufacture. And to get that same 8-1 ratio, the item will now sell for $29.99 (because taking that one penny off $30 makes it seem "cheaper".).
BUT WAIT THERE'S MORE!
Today, if Trump announces 20% on ALL incoming imports, on top of the current 20% already lobbed on Chinese goods, and that 25% extra if the country of origin is buying gas from Venezuela.... the company who makes that item for $3.05 needs to add an additional 65% on the cost, making the base price for said item $5.03, and the new cost to consumer is $40.26.
A product you would have bought for $25.00 now costs you $40.00…
For cost comparison, and using a semi-recent real world example. I quoted a product in both China and the USA. In China, the price for the item was $1.26. In the United States, it was $7.42 per unit (and that was with a reasonable MOQ). Even with the 65% increase, it was *still cheaper* to produce overseas. This wont always be the case, but most of the time... it is. And companies will *still* raise the prices to the consumers to cover their costs.
And everything else
Given everything else that’s happened and is still happening in the USA, in the last three months, these tariffs are just a part of a very concerning and frightening picture. Some of us are in the USA; some of us are now trying to work out if we’re still safe to cross the border to come to Gen Con; others have already recognised that we’re not. If you are living in this, right now, we are sending you strength and hope for the future, and we recognise that TTRPGs are really quite unlikely to be the most important of your concerns at this time.
Thanks for all your support; sorry about all this; no pasarán.
– Maz, and the RR&D team.
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