Tariff Fallout Hits Home for US Game Designers and Studios

The board game industry has long been one of innovation and community, and by most accounts, not one of significant profit. So when a new tax came down this week that would raise costs for the industry by 54 percent, designers and publishers expressed horror at the policy and its potential to decimate the industry.

Designer Jamey Stegmaier, known for the international bestsellers Scythe and Wingspan, shared his frustration this week in a blunt post on his blog. “Last night I tried to work on a new game I’m brainstorming, but it’s tough to create something for the future when that future looks so grim,” he wrote. “I mostly just found myself staring blankly at the enormity of the newly announced 54 percent tariff.”

For a designer of globally bestselling games, the vulnerability of the post was striking—and it’s a feeling shared by many.

A Cross-Continental Supply Chain Comes to a Screeching Halt

Stegmaier’s issues with the new import tax are born of both numbers and time.

American board game companies rely on manufacturing in China. Germany is often mentioned as an alternative location and a spiritual home for modern tabletop gaming, which has its board game factories. The difference between the two is that German facilities tend not to offer turnkey manufacturing. For full runs of printed cards, custom plastic miniatures, wooden tokens, die-cut boards, and specialty dice, board game companies turn to China.

That’s because there is simply no comparable domestic infrastructure. Stegmaier says he was once quoted $10 by a U.S. manufacturer for…a plain empty game box. And that was the quote he was able to get before people started rolling their eyes. (The same amount of money will cover production and packaging of a whole game in China.)

That imbalance in costs is what makes the new tax such a shock to the industry. The 54 percent tariff was announced with almost no warning, and the vast majority of U.S. board game publishers operate on such slim margins, there will be almost no cushion at all for the increased price.

Industry Voices

Placko, CEO of Steve Jackson Games, the company behind games like Munchkin, wrote in a similar vein in her post this week. As is the case for most U.S. board game companies, SJG manufactures overseas because there is simply no real option for production in the U.S.

“I get asked a lot, ‘Why can’t you make games in the US?’” she wrote. “I wish I had an answer for you other than, well, we totally could if the costs and the logistics made sense. But it doesn’t work that way, not in this industry. The equipment, the trained labor, and the overall timelines are not here yet.”

Placko also points out that for the small and medium-sized publishers that dominate the industry, it’s not just shipping logistics that will be scrambled by the new rule. Without the infrastructure to manufacture in the U.S., smaller companies can’t simply repatriate their production and stay on top of the new costs.

Rob Daviau, co-founder of Restoration Games and designer of the series Pandemic Legacy, has been warning his social media followers about the consequences of any such tariffs for months. In recent interviews, he’s been blunt. “If these tariffs come into effect, I foresee a great collapse in the hobby gaming market in the US,” he told BoardGameWire.

Gamers Feel the Pinch

Retailers and consumers are expected to be hit as well. Prices for new games will almost certainly rise, which may lead to a number of bad options for publishers. Cutting costs will almost certainly mean a reduction in the quality of components or the extent of new releases. Some publishers may also decide against releasing new games.

There are also questions about how local game stores will be affected. Brick-and-mortar game stores are already operating on slimmer and slimmer margins as more and more consumers look to buy online. If those gamers start to rely on their collections (some of which may be what some gamers call their “shelves of shame”) or buy their games online for cheaper prices, those stores could be affected as well.

“Within a few months, US companies will lose a lot of money and/or go out of business,” Stegmaier said. “And US citizens will suffer from extreme inflation.”

A Band-Aid Solution, Maybe

So what about the publishers that might be able to put their product through a distributor outside the U.S.? The tariffs on goods shipped to Europe, for instance, are much lower.

The problem, as Stegmaier points out, is that distributors still have to bring that product into the U.S. at some point, where the same tariffs would be applied. A better option, for those companies that are already up to 65 percent U.S.-sales-dependent, like Stegmaier Games, would be to turn to European or other non-U.S. distributors.

But as many have pointed out, that’s not a viable solution for American companies.

Time is also a crucial factor in this whole equation. For games that are still in the design or early production phase, budgets can be changed and amended. But for games already en route from China, such as the shipment of 8,000 games awaiting the import bill from California-based Chris Solis of Solis Game Studio, there’s no turning back the tariff clock.

A Game Industry in Crisis

The publisher lobbying group, the Game Manufacturers Association (GAMA), has been working on behalf of board game publishers to reduce the tariffs, but so far to no avail.

With the tariffs set to go into effect on January 1, there are still a few months left on the clock, but for an industry that prides itself on innovation, cooperation, and, of course, fun, this is one of the more difficult times many have faced in modern history.