Gaming failed to avoid the wrath of the intensifying US–China tariff war, with Macau-based supplier LT Game prohibiting US sales.
The escalation was confirmed by LT Game’s Chairman and Managing Director, Jay Chun, during the opening of the company’s new production line in Macau.
He told reporters that the prohibitive tariffs, in excess of 100%, imposed on gaming equipment have handicapped the industry to the point where it is no longer financially viable for the firm to compete in the US market.
However, Chun admitted that the American market represents a minor share of LT Game’s total overseas sales, and the company will continue to focus on the Asian and European markets.
Tariff war touches gaming
The encompassing of gaming within the trade war between the world’s two largest economies will be of significant concern, given that there are no signs of negotiation in the near future.
US President Donald Trump has hiked levies on some Chinese goods to as high as 145% while Beijing has retaliated with some 125% tariffs on US imports.
More significantly for the gaming industry in China, 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.
The steps will have drawn the attention of the significant presence of US-based firms in Macau, with Sands China, Wynn Macau and MGM China all making up a key part of the special administrative region’s casino resort ecosystem.
It would appear the steps taken by Trump will increase friction when it comes to investments in the markets included on the list.
Trump stated that “economic security is national security” and expressed concerns that US capital is currently being used to boost military progression in China.
Industry awaits full impact
Although the eyes of the world are mostly focused on the escalating tensions between the US and China, Trump has also levied tariffs on countries around the world, including the US’s closest neighbours, Canada.
As a result of tariffs placed on the nation, the Alberta Gaming & Liquor Commission, alongside other provinces such as Saskatchewan and British Columbia, suspended the purchase of US gaming terminals.
Last year, sales of slots in Canada numbered 15,000, accounting for 16% of total US and Canada sales.
Although the gambling sector appears to be largely unaffected by Trump’s global economic strategy, the unveiling of worldwide tariffs did signal a universal shrinking of gambling stocks.
Speaking to iGaming Expert, Phil Bernard, Vice President of Eilers & Krejick Gaming, emphasised that, given the freshness of the news, digesting the exact costs of the tariffs for the gaming sector is a complex task.
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”.
