With a newly enacted 54% tariff on goods from China and a 46% tariff for those from Vietnam, will we soon see an increase in the prices of VR headsets in the United States?
This executive order, signed by President Trump, is scheduled to take effect on April 9, which falls on a Wednesday. The tariffs are applicable to products manufactured in these specified countries, not merely those marketed by companies based there. While certain exemptions exist, VR headsets are unfortunately not included.
Currently, many popular headsets, such as the Apple Vision Pro, Meta Quest, PlayStation VR2, and Pico, are produced in China, Vietnam, or both. Previously, a 20% tariff had already been imposed on Chinese imports, which headset manufacturers could manage to an extent, as there had been no tariffs on electronics produced in Vietnam until now.
However, with these tariffs escalating to 54% for Chinese products and 46% for those from Vietnam, it appears unlikely that most VR headset manufacturers will be able to avoid raising their prices.
For instance, analysts have estimated that the production cost for Meta’s Quest 3 is around $430, not including R&D and additional indirect expenses. With the new tariffs, the cost might surge to approximately $650, well above its current retail price of $500.
Will we eventually see the Quest 3 priced at $700, the Quest 3S at $500, and the PlayStation VR2 returning to $550?
Even products like the US-manufactured Bigscreen Beyond 2 would also face price hikes due to increased tariffs. Many of its parts, including high-cost micro-OLED displays sourced from China, will be impacted, and these costs will likely be passed on to consumers.
Meta has been attempting to shift a significant portion of Quest production to Vietnam to circumvent the tariffs previously anticipated for Chinese imports. But with Vietnam being affected as well and the difference being a mere 8%, this strategy may not yield significant relief.
That said, not all companies might have to raise their prices. According to the same analyst estimates, the production cost for Apple’s Vision Pro stands at approximately $1700, again not accounting for R&D and other indirect costs. Consequently, even with a potential increase to about $2500, Apple could still maintain a healthy profit margin.
Typically, hardware manufacturers stockpile large inventories in each market they operate in, hence we are unlikely to see immediate price increases for the Quest and PS VR2 next week. Nevertheless, as the US inventory of these devices depletes, how can current prices be sustained when new stocks are expected to come in at nearly 50% higher pricing?
There remains the possibility that President Trump may reduce or eliminate these tariffs before that situation arises. His administration has characterized tariffs as tools to incentivize certain policy changes from foreign nations, and it’s conceivable that he could feel satisfied with the outcomes achieved before the US stockpiles run out. Given the rapidly changing global political context, making definitive predictions about this situation is challenging, so we will be monitoring developments closely in the weeks and months ahead.