They won't. That's the asinine thing about this point less excercise. You'd have to have the manufacturing capacity in place for this type of thing to have a chance at success. There is no domestic manufacturing capacity to shift too. Of course spending a couple of decades beefing up capacity and then slapping on tariffs can't be done in a soundbite or 4 year presidential term. 

EDIT: You know I really wish people would have a legitmate discussion around Game Key Cards. While Nintendo isn't completely blameless, from a business standpoint, it seems like their biggest mistake was given Game Key Cards a unique name so that consumers would know what they are buying. Unfortunately, the disc/card being just a software key isn't new. There was minimal bitching about this fact until Nintendo gave a seperate name to games that do this. MS has essentially been doing this for years. In the case the Switch 1 publishers, Capcom comes to mind, would often just by the smallest game card Nintendo offered and consumers would have to download their supposedly physical game.

Nintendo should have offered a lower capacity card option, but lets be honest here, it's doubtful that many if any games publishers that went with Game Key Cards would have been swayed by this. The only thing it would have done is save Marvelous some money because in spite their small size they've actually been putting their games on the card. Large 3rd Party publishers, CD Projekt RED excluded, wouldn't offer their games on the card regardless. 

Nintendo is facing challenges of their own:

1. They probably will fail to make as much profit per hardware unit as they did with Switch 1, even though it's notably more expensive.

2. Their userbase being physical bias is a problem, because cartridges cost up to $17 to make in addition to the 30% retailer fees. Their outrageous physical prices are an attempt to accelerate the switch to the cheaper (and more profitable) digital. Bluray in comparison is very cheap, plus Sony and MS both have much higher digital ratios.

Decent chance Nintendo consoles' profit margins will fall dramatically this generation even if Switch 2 manages to sell 150 million+ units. 

Source for retailers charging 30% now? 

I don't have a recent source, but I thought this is common knowledge? A quick search on the internet shows that retailers used to pay publishers anywhere between 50%-75% of the MSRP, which is effectively a 25%-50% fee.

It's still confusing to me though. Does this mean 3rd party publishers have to pay 30% to platform holders and another 30% to retailers? lol.

Here's a good read from December 2020:

https://www.serkantoto.com/2020/12/30/price-video-console-game-digital-physical/

According to this, platform holders only get 15% from 3rd party publishers for physical game. The figures probably vary depending on the game, country, retailer, etc.

The only other option is to simply bite the bullet, release in 2027/28 while Trump is still in office and his tariffs are likely still in effect, charge an exorbitant launch price because of said tariffs, and if the tariffs are rolled back by the next administration (which will hopefully not be in favor of trade wars) then issue a price cut a year or two into the console's life.

In any case, as long as the U.S. is engaging in this trade war BS, then we're going to be dealing with game hardware that's more expensive than it would be otherwise. The companies that make said hardware would rather deal with lower overall sales volume if they can maintain profitability than maintain sales volume and lose money from having to eat the Trump Tax.

The corporations do not need to eat all the tariffs, but Sony is big enough to where they could eat the 15% tariff and still profit with PlayStation.
But when Xbox is sinking in the hardware department and Nintendo hasn't been in direct competition for a while there is little incentive to eat most or all of the tariffs.
I don't need to give Sony much credit but at least PS5 is $50 cheaper than Series X.

Steam destroyed the physical market two decades ago. It's been surviving on borrowed time since then/

Thankyou for the link but that guy doesn't actually name his source. Whether you are a PHD or a regular guy your source cannot be "because I said so". Also I suspect that the writer of that blog is referring to Japanese physical games since that is what his site mainly focuses on. Finally, he is CEO of his own company which unless he has more employees than himself is pretty suspicious. 

I tried finding my own source but could only find the typical breakdown of $60 that has been around since 2010. 

But even this is pretty suspect because having talked to multiple independent shop owners they all swear they only make $5 on a sale of a brand new game.

But then again it would make a lot of sense to be 30% a cut. $15 of $60 is 25% and a 5% bump for going to $70 would make sense. Sorry I just want a solid source on this either way. 

Fook that orange pumpkin head

I wish he linked more solid data breakdowns, but he pretty much is a source himself. He's an active industry guy with connections, followed and sometimes cited by Jason Schreier, Daniel Ahmad, Christopher Dring, Takashi Mochizuki, Tae Kim, etc.

It is curious that articles about this are scarce. But there is just no way that platform holders and retailers get a 30% cut each. This would leave like 40% between the game's publisher and developers, not factoring in disk/cartridge cost, development and marketing budgets, and extra fees like 3rd party engines and licensing. So I'm going to assume that the cuts are more flexible.