Fairly dystopian images of President Donald Trump showcasing a board in the White House Gardens with the fate of every nation when it comes to tariffs have flooded global newsfeeds this week.
Like many industries, the gambling sector is unlikely to be unaffected, Trump’s actions already saw a universal shrinking of gambling stocks yesterday. Nonetheless, attempts to establish the full impact on the global marketplace and on trade remains to be seen.
Phil Bernard, the Vice President at Eilers & Krejcik Gaming, emphasised to iGaming Expert that, given the freshness of the news, digesting the exact costs of the tariffs for the gaming sector is a complex task.
He did however state his belief that “cabinet costs will rise given supply chains are globally connected, as one would naturally expect, but the average rise in cost could be less than the noted tariff rates.”
Suppliers take a relatively diverse approach to the global distribution of iGaming products, with Bernard highlighting that the “dependence on international manufacturing and sourcing varies”.
The latest update from Trump around tariffs took aim at China and the UK, with China being hit by an increase of 34% to 54%, whilst the UK has seen tariffs of 10% being implemented.
Meanwhile, China has responded to the latest tariffs by imposing an additional 34% tariff on all US goods.
Whilst Canada wasn’t under any additional tariffs during the latest wrath of the President, Trump’s actions have already served to increase friction between the two nations when it comes to gaming.
The Alberta Gaming & Liquor Commission (AGLC) previously suspended the purchase of US gaming terminals as Trump’s as a result of the trade war embarked upon by the US president.
It caused the commission to halt the acquisition of both slots and video lottery terminals (VLTs).
A directive from the AGLC issued on 6 March stated that it would only purchase gaming equipment from companies that have support services in Alberta or countries that “share a free trade agreement with Canada”.
Furthermore, in retaliation to previous US tariffs, Canada has placed a 25% import charge on 1256 items, including two gambling-related products.
Trump’s “America First” approach has also elevated the tensions between the US and Macau, with him including Asia’s gambling capital on a list that details specific “foreign adversaries”.
The “America First Investment Policy” memorandum detailed plans to impose investment restrictions on the regions listed, as Trump underlined fears over China utilising US tech and harming US interests.
Whilst the dust settles on a chaotic week of developments around US relations, the impact on gaming is still being assessed. Bernard revealed the finished product is unlikely to bear the full brunt of the noted tariff increases, given “many of the larger suppliers assembling the games locally in larger markets.”
He added: “Certain components, especially electronics like chips and screens, will rise in cost, but those items are a fraction of the marketed cost of the final product. Finally, we’d expect the cost increase to be shared, so margins could be impacted modestly.”
The attempts to re-shape global trade from Trump caused Eilers & Krejcik to shift its estimates in terms of US/Canada sales, with significant reductions from +2% growth to -13%, “largely due to expected retaliatory measures from government managed Canadian operations. In reaction to the tariffs imposed on Canada earlier this year”.
He concluded: “The seemingly broad concern is this impacts the consumer in the near-term due to rising costs and slower growth. Gaming spend is a discretionary item, it is directly tied to the health of the consumer. If the economy slows down, gaming spend is likely to be impacted. The market is generally healthy right now, but the recession risk has risen [though it’s not guaranteed].
“All said, it’s worth bearing in mind that this is a volatile situation and things could change. For example, we’re assuming Canada and the US reach an agreement on trade during the year and purchasing essentially returns next year – more of a demand shift than an extinguishment. That agreement could be reached next quarter and demand returns in the back-half of this year.”
