Tim Higgins (3:12)

Tim Cook are always very quick to talk about how critical they are to the US Economy, how many jobs they create. They've talked in recent months about investments that they're planning to make in the US These are big numbers they are throwing around. And Tim Cook has talked about in the past that he doesn't think Apple could be what it is if it wasn't a U.S. company. The way that Tim Cook just talks to lawmakers and presumably the president is in this kind of tends to be a little bit of a humble, aw shucks, Alabama accent, Americana. Apple's out there creating jobs, good for the country. That is his go to kind of stump speech, if you will. And that's the kind of message that in a lot of ways Trump wants to hear.

Victoria Craig (4:07)

In a world with very short attention spans, it seems like Tim Cook is always playing the long game with this relationship, especially with President Trump. We've talked a lot about how these tariffs could affect and are likely to affect Apple. What kinds of things was Tim Cook likely pushing for behind the scenes?

Tim Higgins (4:27)

There was some in the White House who were out very publicly talking about how the tariffs were going to move assembly of the iPhone to the US and those who thought that was going to happen just haven't been paying attention to Tim Cook or Apple over the past 13 years as he has been CEO. And he has really developed an incredible industrial machine that is heavily based in China, but also has suppliers around the world, including the US Set up to create these iPhones, an incredibly important part of the global economy in so many different ways. And moving that is not something you do overnight. It is not something you do in a quarter. It is not something that you do in a single year. Apple has been working in the past few years to diversify its supply chain. It has been ramping up production in India. It is doing production of its other devices in Vietnam. But it takes time. Cook has talked about the workforce in China is being skilled. He would say it's not about low cost labor. But you can't argue with the fact that the labor in China is cheaper than the U.S. but there are cheaper places in the world as well. That's his point. There's also an issue of getting the assembly and production to quality standards that Apple holds so near and dear to itself. This is something that takes a lot of time to sharpen. And so we kind of see two kind of opposing views on the world going on right now. Tim Cook's kind of vision of the long arc of time making plans for the years ahead versus Trump administration wanting things to happen very quickly, and it puts the two worlds on a collision course.

Victoria Craig (6:20)

That was Wall Street Journal columnist Tim Higgins. Coming up, we'll tell you how Nintendo is playing the short game on tariffs and what that means if you want to get your hands on the company's latest console. That story after the break.

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Victoria Craig (7:12)

For a long time, Nintendo has had plans in place that would let it stay nimble in the face of a trade war. So when President Trump raised US tariffs on China to as high as 145% for some goods, the company was able to pivot almost instantly. WSJ columnist Christopher Mims says that sent a wave of relief through customers of all ages, including some that are very close to home. So Christopher just put into perspective for us how highly anticipated the Switch 2's launch is both in and outside your own household.

Christopher Mims (7:47)

Within my own household, my two sons, a teenager and a yearly teenager, have been saving all of their pennies in order to buy one of these. And turns out that's not atypical. There are 190 million gamers in the United States of America. Nintendo has sold more than 50 million of the original Switch consoles in the eight years that it has been out. And the level of anticipation for the Switch 2 is through the roof. This is singly the best selling video game console in the U.S. certainly. And so the fact that kids might not be able to get their hands on it here in the US because of tariffs has made tariffs a subject of conversation among my children and apparently in many other households.

Victoria Craig (8:34)

I was really floored by some of the numbers in your piece about just how fast Nintendo was able to shift where it's importing some of its consoles from into the U.S. nintendo, like many.

Christopher Mims (8:46)

Other electronics manufacturers, especially Apple, really anybody with much scale ever since Trump's first term, and especially Covid, has been preparing for today. And what they have done is what's called a China plus one strategy where they are trying to source their goods, their final manufactured electronics still from China, but then also from some other place for a lot of these companies that Southeast Asia. So Nintendo in particular, it's Vietnam and Cambodia. Other companies have moved manufacturing to places.

Victoria Craig (9:19)

Like Thailand for customers, particularly in the US the big question is going to be around pricing because people were already really wary of the $450 price tag that the Switch 2 was going to carry. Could that dollar amount go even higher because of the tariffs?

Christopher Mims (9:36)

Initially it seemed like Nintendo was either going to have to not sell the Switch in the US which really is an impossibility for them, or possibly charge a great deal more under the original tariff scheme where they were looking at. We have to toggle back in our minds because it changed so much. But originally it was like 50% tariffs from China or 50% tariffs approximately from Vietnam. And those are the two places where they manufacture almost all of the Switch 2s. It now appears with the tariff pause that Nintendo could potentially sell the Switch 2 at its original $450 price because the tariffs are only, and I'm putting that in air quotes, 10% from Vietnam. Part of what's going on here is that Nintendo ships these consoles the quarter before they're going to be distributed to retailers. So the company looks like it has already imported close to 2 million Switch 2 consoles into the US I've been told that many of them are sitting at a warehouse in Seattle. And so Nintendo could just sell those as is without tacking on a surcharge for tariffs. But then they risk alienating people two, three months from now if they had to jack up the price because of tariffs.

Victoria Craig (10:50)

What has Nintendo said? Christopher?

Christopher Mims (10:52)

So Nintendo declined to comment on the specifics of their pricing plans and the details of their manufacturing and shipping. They did say that the pre order date in the US for the Switch 2 continues to be delayed.

Victoria Craig (11:08)

So I'll ask you the same question I've been asking almost everyone else when it comes to tariffs in tech. Can an American made Switch be possible for Nintendo?

Christopher Mims (11:18)

It's such a great question. Everything depends on your time horizon, right? 10 years from now, could we have an entirely American made Switch or let's be honest here, North American made, right? Because it's probably gonna end up being made in Mexico. Yes. The problem is that in the meantime, companies might just give up on the US because you cannot rapidly switch this manufacturing to the United States.

Victoria Craig (11:48)

So it comes down really to a whole complicated question about economics, which was a complicated question that you got to answer in your own household. How are your kids doing with the idea that maybe they will actually get the Switch two in the end?

Christopher Mims (12:01)

They've been thrilled by the moment to moment updates. It's been a real up and down drama in our household, but they are very happy to hear that Nintendo has not moved the release date for the Switch and that they will probably be able to get it at the original $450 price point.

Victoria Craig (12:21)

Cobble together those allowances.

Christopher Mims (12:23)

Exactly.

Victoria Craig (12:24)

That was WSJ tech columnist Christopher Mims. And that's it for Tech News Briefing. Today's show was produced by Julie Chang with Deputy editor Chris Insinsley. I'm Victoria Craig for the Wall Street Journal. We'll be back this afternoon with TNB Tech Minute. Thanks for listening.