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Trump’s tariffs could ruin the American board game industry

Trump’s trade war with China is bad news for gaming

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My name is Mike Selinker, and I’m a developer of tabletop games like Betrayal at House on the Hill and the Pathfinder Adventure Card Game, a former creative director of Dungeons & Dragons and Avalon Hill, and the publisher of Apocrypha, Thornwatch, and The Ninth World. Like many board game producers, I feel threatened by the Trump administration’s tariff war, and folks might not understand why.

So I’m going to tell you how international game production works, why it’s especially vulnerable to trade wars, and why you should expect to pay more at your friendly local game store soon.

I’m also going to tell you why this situation is batshit crazy.

Where board games get made

I’ve made a lot of games in a lot of places in the last 30 years. I’ve been lucky to have some printed in the United States and others printed in China. To me it’s all part of the same economy; families of employees in both countries have to eat, and I’m happy to help put food on their tables.

As a citizen of the United States, I’m a lot closer to the families of Americans, and in a perfect world, I’d be able to print every game I made here. Even I, with years of experience making popular games, don’t have that opportunity. That’s because America isn’t set up to provide services to anything near everyone who wants to make board games. It’s just not how we’ve arranged our economy here.

A printer called Cartamundi is headquartered in Belgium but has two massive plants in the U.S., one in Massachusetts and one in Texas. They print my games Pathfinder and Thornwatch. That’s it. Sometimes Cartamundi is the right option for a publisher here in the U.S., as they can get a product done without shipping it across an ocean.

Cartamundi can’t print every game at prices that publishers want to pay. That’s because, like nearly every American company, Cartamundi calculates the price of its fixed facilities into its costs. Those costs apply whether it’s a small run or a large run, and they’re not trivial. And time of year is an important issue. As the printer of many family games including those of Hasbro, Cartamundi has a lot of games to manufacture leading up to the holiday season. Cartamundi is an option I like, but it’s not the right answer for everyone.

If a U.S. publisher wants an option other than Cartamundi, they will have to look elsewhere. Cartamundi has only a few competitors in the U.S. There are just a few other options — USPC, PBM Graphics, a couple others.

I was fortunate enough to have our game Lords of Vegas printed in the United States by Mayfair, but that company doesn’t exist anymore. Last year, Mayfair was bought by the North American branch of the European game company Asmodee, which now owns Lords of Vegas. Like other companies, Asmodee needs more than what it can find in the U.S. to print its many games.

Some U.S. publishers have found printers in Europe such as Ludo Fact, but they aren’t immune from tariffs. Predictably, the source of most of the output in the last decade has been China. At least a dozen good companies print games in China — Panda, Longpack, Whatz Games, Regent, Gameland, AdMagic, and others. Some of these are based in the US, even though they print overseas. Regardless, they’re in competition with each other, so they have incentives to keep prices down. That means they might not factor in their base costs like equipment and facilities. So they’ll charge less than the U.S. printer — sorry, the U.S. printer — and try to underbid each other.

Game publishers take advantage of this competition and can choose among options by focusing on price, quality, and timing in differing amounts. That’s what keeps the price of board games affordable. You can buy a game for $50 to $80 that will give you months and even years of enjoyment, partially due to the competition between printers that’s enabled by a global economy.

That’s about to change, in ways that are going to have a severe impact on all aspects of the business of board games.

What a trade war is, and why it matters

I’m not neutral about politics, despite the wishes of some gamers who would prefer I would shut up and stick to game design. I write about game theory and politics, both on my policy blog and in my book Game Theory in the Age of Chaos, and a lot of that work is spent deconstructing the disaster that is the Trump administration. On an environmental, human rights, diplomatic, and race relations level, they are unassailably awful. But if the so-called great businessman was delivering on a business front, I’d give him credit for that. His love for tariffs makes that impossible.

This is what he tweeted on the subject:

None of that is true. Trade wars are bad, easy to lose, and guided by tariffs. Tariffs imposed by the US government are taxes on Americans. They are insidious, they are hidden from customers, and they are regressive. But worse than all of that is that they are avoidable. Neither country in a trade war benefits, but both suffer.

Trade wars are multi-round battles of a type that board gamers can understand. The weapon is a tariff, which is a tax on goods either entering or leaving a country. One country, angry about some practice from another country, launches a set of tariffs of specific amounts in specific categories. After a couple test runs with tariffing washing machines and solar panels, Trump’s first major salvo was a 25 percent tariff on steel and 10 percent on aluminum from most countries in January 2018, and then a 25 percent tariff on 818 categories of goods from China worth $50 billion in July 2018.

Then the affected countries may reach an agreement to get the tariffs lifted, as Canada, Mexico, Australia, and Argentina did on steel in May of this year. Trump is right now trying to get the UK to give up their National Health Service to avoid his self-imposed tariffs, if you can believe that.

If they don’t like being extorted, the receiving country may instead impose retaliatory tariffs. In this case, China most assuredly did not knuckle under. So Trump increased tariffs on $200 billion more Chinese goods, then China responded with tariffs on $60 billion of our goods, and now Trump has proposed tariffs on $300 billion more Chinese goods. (Note that this is a unilateral decision, made by one person. Congress gets no official say on trade policy.)

There’s a card game like this, called Nuclear War. As you might guess from the name, it doesn’t end well. And so far this trade war has focused on escalation, which is bad for everyone involved, and board games are caught up in the dispute.

How the tariffs hurt board games

For the U.S. publisher of board games — and this is universal to other industries, but board games are the one I know best — here’s how the trade war affects us and our fans. In the aforementioned latest round of tariff announcements, the Office of the U.S. Trade Representative said it was proposing a 25 percent tariff on billions of dollars of goods after trade negotiations with China fell through.

Board games and dice are included under the subheading 9504.90.60. “Chess, checkers, backgammon, darts and o/table and parlor games played on boards of a special design and parts thereof; poker chips and dice.” Toys are under 9503.00.00. “Toys, including riding toys o/than bicycles, puzzles, reduced scale models.”

These were both listed in the latest round of Trump tariffs. We don’t know when they’ll take effect: Some government indications are right away, others on June 15, still others later. There’s no clear messaging from the government at all.

When a company publishes a board game, they look at the cost of manufacturing and shipping to a fulfillment center as a unit. Games printed in China are cheaper, but it’s not as much cheaper as you might think. The increased competition and cheaper labor can make the price of a board game between 50 percent and 66 percent of a U.S. plant at times, but that’s not consistent.

Then there’s the cost moving the games; games printed in China have to travel across the ocean, and that’s not cheap. There’s a cost to trucking games across America too, and it’s often not as much of a savings over sending it by boat as one might like.

When a company has to consider the cost of making its games, it adds all of that printing and shipping together. Then they typically multiply that price by roughly five, and that ends up being the price the consumer pays. That’s because in distribution and retail, the publisher only gets about 40 percent of the retail cost. If printing and shipping their game takes 20 percent of retail, the creator of the game has to live on that 20 percent that’s left from the 40 percent they receive from a distributor. It’s a brutal business with the thinnest of margins.

Tariffs get imposed on the “first sale” price — that is, at the point of import, before the publisher gets the goods. So if printing and shipping what was once an $80 game takes $16, then an additional 25 percent adds $4 to the cost. Multiply that new number of $20 times five and now to the publisher it’s a $100 game. At least at list price.

There are a lot of customers who are willing to pay list price. Many of them are not. They buy games on online discount sites for a lot less. So there’s not a lot of appetite in the market for price increases. That puts the question to the publishers: Do they pass on the new costs imposed by the Trump administration to the consumer or just eat it?

Well, that could mean all the profit goes away. If printing and shipping the game takes 25 percent of retail and not 20 percent, now the creator has to live on a 15 percent margin. And that’s if they’re highly efficient.

Game design is not an efficient process, which is something it shares with many creative endeavors. In the case of my company, I have seven designers working long hours to craft innovative and complex games. We buy hundreds of thousands of dollars of art. Our games underwrite the salaries of dozens of writers and editors and graphic designers and logistical experts. Losing 25 percent of the cut we get off of our games means fewer of those folks —many of whom are right here in America — get employed. That will happen all over the industry. That’s for the publishers who stay in business. Those who don’t will close up entirely, releasing their employees into the marketplace. That will mean increased competition for jobs and correspondingly lower wages and benefits.

That’s bad news if you work in this industry, but even if you don’t, the end result is you have fewer games from which to choose from in the market, and the ones you do get are more expensive. That hinders creative growth and healthy competition, and harms the gaming economy for everyone who participates in it. There is no upside, though a few desperate people have invented one. They think tariffs will solve Chinese piracy, but that’s only if the games get printed at all. You don’t save library by burning it down.

I’ve heard arguments that tariffs will cure what many people think is a glut in the number of board games produced each year. It seems unlikely to me that creators will become less creative because of government pressure. Either way, I would not attempt to cure overpopulation with a hydrogen bomb, and so I wouldn’t try to cure domestic oversupply with an instrument as destructive as tariffs.

The more games that get created, the greater chance we all have to find games that make us truly happy. I’ve never heard the argument that songs would get better if we had less music, or that too many movies released in a year means that the best ones are worse. We want more of what we love, not less.

This isn’t just a problem for board games, and it’s not just a problem caused by Republicans. Tariffs are bad for everyone, no matter who imposes them. In 2009, President Obama imposed tariffs on tires and saved an estimated 1,000 jobs — at a cost of nearly a million dollars a job. In 2002, President W. Bush imposed tariffs on steel and saved a few jobs in the U.S. steel industry, but nearly crushed all the industries in the U.S. that actually used steel (housing, auto manufacturing, etc.). There were 10 times as many Americans working in those industries as in the steel industry itself.

As is typical, Trump learned nothing from his predecessors. Tariffs “didn’t work for Bush, but nothing worked for Bush,” he said. That’s just idiotic. Just because other things didn’t work doesn’t mean the thing you like would have worked. And those presidents imposed tariffs only in very select instances. Trump is imposing protectionism on nearly everything. In those industries where Americans lead — like, say, in the design and creation of board games — we will get hurt far worse than those in other countries. We will lose ground on both a competitive and a creative level. All because our president refuses to learn even the slightest bit about economics.

Hoping Trump will learn is a fool’s expectation. The only way this stops is if Congress asserts its authority over trade by passing anti-tariff bills with veto-proof majorities. Since most Republicans hate tariffs as much as Democrats do, there have been several Congressional attempts to reign these tariffs in. All have failed, as Republicans have surrendered the fight to Trump. So about the only thing voters can do is write their Congresspersons in support of anti-tariff legislation.

Otherwise, it’s very likely that board games — and quite a lot of other things you buy — will cost a lot more very soon.