The tariff situation in the United States is going from bad to worse, as companies continue to pass on added costs to consumers.
This year, the United States government has issued a range of tariffs on different countries with the stated goal of bringing more manufacturing to the United States. In the short term (at the very least), a labor and education gap means that companies will still have to depend on countries like China, Vietnam, India, and other tariff-impacted economies to manufacture the products.
The Xbox Series X and Xbox Series S are no exception.
Microsoft and other companies have already been forced to increase the prices on their tech products, particularly so if they’re heavily dependent on China, whose patchwork of tariffs ranges from anywhere between 10% and 40% for various components and other aspects of the overall supply chain. Whether it’s storage, chips, or even just circuitry, every aspect of an Xbox Series X|S console has been subjected to a variety of duties based on what’s inside the box — putting pressure on manufacturers to increase prices, diversify supply chains, or both in a lot of cases.
Microsoft increased the cost of its Xbox Series X|S products in response to tariffs already once this year, and today, they’re increasing it again.
Shared with us earlier today, Microsoft is increasing the recommended retail pricing (RRP) for its Xbox Series X|S consoles due to “changes in the macroeconomic environment.” The new prices will kick in on October 3rd, so if you were considering buying an Xbox in the near term, now would be a good time to pull the trigger.
These price increases affect solely the United States, heavily implying tariffs are to blame here. Controllers and headsets won’t see increases (for now).
|
Product |
New Price (RRP) |
Previous Price (RRP) |
|---|---|---|
|
Xbox Series S 512GB |
$399.99 |
$379.99 |
|
Xbox Series S 1TB |
$449.99 |
$429.99 |
|
Xbox Series X Digital |
$599.99 |
$549.99 |
|
Xbox Series X |
$649.99 |
$599.99 |
|
Xbox Series X 2TB Galaxy Black Special Edition |
$799.99 |
$729.99 |
A source at Microsoft offered the following comments, “We are navigating an incredibly dynamic environment right now. We’ve assessed the changing macroeconomic environment and addressed the applicable impacts.” Indeed, the tariff situation between the United States and China, where Xbox consoles are manufactured, changes on a near-monthly cadence, with different parts of the console subjected to different duties. Earlier exemptions expired recently, but there’s no telling what new ones could be put in place tomorrow.
Trump is expected to meet Chinese premier Xi in the near future, following a landmark deal to transfer TikTok’s U.S. operations to American companies like Oracle. There’s every chance a thaw in tariffs could emerge there. China has also issued its own curbs on some American tech, such as NVIDIA’s AI chips.
Microsoft’s support pages on the matter conceded that the changes are “challenging,” while emphasizing that they’re ramping up access to Xbox content in other ways.
“Beginning on October 3, we will update the recommended retailer pricing for Series S and Series X consoles in the United States due to changes in the macroeconomic environment.
We understand that these changes are challenging, and they were made with careful consideration. Looking ahead, we continue to focus on offering more ways to play more games across any screen and providing value for Xbox players.”
Microsoft has been working hard to convince its publishing partners to ship games on Xbox PC, complete with Xbox Play Anywhere, although most AAA publishers don’t seem interested for now. Microsoft has also been launching many games directly into Xbox Cloud Gaming, even from third-party developers, which could increasingly be an attractive option for gamers who get priced out by these hardware RRP increases. Microsoft is poised to increase the quality of Xbox Cloud Gaming streams, too, while also lowering the cost of cloud entry below the current $19.99 subscription via Xbox Game Pass Ultimate.
The tariff situation is clearly impacting Xbox Series X|S console hardware. It’s also been cited to me as the sole reason Microsoft has yet to reveal the RRP of the upcoming Xbox Ally PC gaming handheld. Built in partnership with Taiwan-based ASUS, the Xbox Ally is most likely being manufactured in China as well. And thus, it will be subjected to a variety of duties based on its components.
The similar Lenovo Legion Go 2, also made in China, was revealed to run all the way up to $1350 in the United States, giving eager fans some serious sticker shock. Many are expecting the Xbox Ally to be cheaper, owing to a less complex design and Microsoft doing the heavy lifting on marketing. But the lack of an RRP reveal, less than a month from launch, isn’t exactly encouraging.
The first console generation where prices went up over time, instead of down
As for the Xbox Series X|S, this is the first video game generation in history that has seen prices go up over time, rather than down. With traditional core gaming already seeing heavy challenges from other forms of entertainment, simple mobile games, and forever games that are compatible with older hardware — these price increases are going to serve only to make the hobby even less attractive to newcomers.
Microsoft’s push towards PC and PlayStation, hoping to find users where they already are, is offsetting some of the pressure. I’m also expecting Xbox Cloud Gaming to shed its (beta) tag this year and start ramping up on marketing too, as it could become a viable alternative for many who simply can no longer justify the astronomical prices of native console hardware.
I think short of reducing tariffs and allowing trade to flow freely again, prices stand only to get worse, rather than better. Any realistic scenario of Xbox consoles (or any major console electronics, for that matter) being manufactured in the United States could be anywhere up to a decade away, owing to a lack of infrastructure and poor demographics. There would need to be a large education campaign to boost manufacturing vocations, as well as efforts to subsidize companies willing to take a risk on home-grown manufacturing operations.
There has been a lot of talk of investment in U.S. manufacturing, but for it to produce any meaningful impact on prices would likely take years. Things are simply cheaper to manufacture overseas, and that reality isn’t likely to change any time soon. I suspect things will only get worse before they get better.
