Dive Brief:
- Nintendo has secured $300 million in refunds for invalidated U.S. tariffs it paid last year amid the launch of its latest video game console, according to a fiscal Q1 earnings report.
- The Switch 2 manufacturer said it bore the brunt of the International Emergency Economic Powers Act levies, even though it did raise prices on certain hardware last year due to unspecified “market conditions.”
- The refund helped fuel a 22-percentage-point year-over-year increase in gross profit margin during the quarter, with the company also reporting a 150.5% surge in operating margin.
Dive Insight:
Nintendo is getting tariff relief after it was forced to navigate the launch of its flagship Switch 2 console amid the deluge of sweeping tariffs President Donald Trump installed last year.
In March, the company known for producing the Super Mario and Legend of Zelda franchises, joined the mass of companies that sued the U.S. government seeking refunds for IEEPA tariffs following a Supreme Court ruling striking down the levies.
The next month, as Customs and Border Protection got to work creating a means of delivering IEEPA tariff refunds to importers, two consumers filed a class-action lawsuit against Nintendo. The case alleges the company raised prices due to the IEEPA levies and should therefore pass any recouped tariff costs back to customers. Nintendo has rebuffed the suit and filed for its dismissal, arguing that consumers are not legally entitled to tariff refunds.
“Nintendo disclosed to consumers its cost inputs, shouldered the impact of tariffs where it could, and gave Plaintiffs the products they paid for at the agreed-upon price,” per the dismissal motion.
Despite recouping some tariff costs, Nintendo is still facing supply chain struggles, particularly with memory, leading it to further raise prices for consoles. The company took a 100 billion yen ($630 million) hit in fiscal Q1 2027 due to rising component prices, namely related to memory inputs, per the earnings report.
