Analysts predict that a 25% tariff on goods imported from Mexico will have a significant impact on the U.S. gaming console retail market. Since Mexico plays a vital role in physical game production, these import tariffs could lead to higher prices or a greater shift toward digital-only game distribution.

While video game discs sold in the United States were once produced domestically, Circana analyst Mat Piscatella and Niko Parners analyst Daniel Ahmad noted that much of the industry's critical production infrastructure has since moved to Mexico. Historically, Sony has produced almost all of its discs at a factory in Indiana, which now mainly produces packaging for PlayStation 5 game cartridges.

U.S. President Trump has repeatedly threatened to impose 25% tariffs on various goods imported from Canada and Mexico. The government has postponed this decision for the first time, but once the delay expires, the resulting increased costs may hit game publishers and retailers.

Meanwhile, the existing 20% ​​Chinese import tariff is expected to continue to drive up hardware prices.

Game companies may pass these costs on to consumers, but the impact could extend beyond the price of physical games. While digital sales eliminate the cost of manufacturing discs and sharing revenue with retailers, publishers tend to pocket the difference rather than lowering the price of digital games, which can strain their relationships with retailers.

Another possible response is to speed up digital-only distribution. Disc-disc PC games have been virtually non-existent in most territories for years, but full-price digital console games are still rare.

Despite a major shift in digital consumption on consoles - physical game sales have halved since 2021 - many players still prefer to own discs that can be traded or loaned to friends.

Moving disc production back to the United States would be expensive and time-consuming. Given the continued decline in game retail sales, many publishers may see no incentive to make this investment - further reinforcing the industry's growing trend away from physical media.