Nintendo's profit jumped 53.5% to ¥147.4 billion (£694 million) in the three months ending June 30, 2026, nearly double what analysts expected (¥77.8 billion). But the boost came mainly from refunds of US tariffs — taxes on imported goods — that the US Supreme Court had ruled illegal, according to The Guardian. Meanwhile, Nintendo's actual revenue (the money it made from selling things) fell 10% from the same period a year earlier to ¥517.8 billion.

Here is how the tariff refund works. A tariff is a tax a government charges when goods enter the country. Trump's administration had charged these taxes under what it called "Liberation Day" tariffs. The Supreme Court ruled those tariffs were illegal, meaning the government had to give back the money it had collected. The Trump administration refunded about $100 billion, which was 60% of the $165 billion total collected. Nintendo's official financial results, published August 6, confirms the quarter's numbers. Reuters also reported that Nintendo's operating profit rose 150.5% to ¥142.6 billion ($903.62 million) for the April-June period, also pointing to tariff refunds as a factor.

Nintendo's shares, traded on the Tokyo stock exchange, rose 2.87% on Thursday after the earnings announcement. The market reaction reflects a strange situation: a company whose sales went down but whose profits went way up, because of a one-time government refund rather than anything the company itself did.

The tariff story is not over for Nintendo. After the Supreme Court ruling, Nintendo filed a lawsuit asking the White House for a full refund of everything it paid in tariffs, plus interest. At the same time, Nintendo is facing a class action lawsuit (a lawsuit filed by a group of people with similar complaints) from customers who say the company raised prices because of the tariffs and then kept the benefit of the refunds. Nintendo's lawyers called the lawsuit "meritless," saying customers paid the agreed price for the goods they wanted and received.

The dispute extends beyond Nintendo. In July 2026, the US president put a new round of tariffs on more than 80 countries, including Japan. Now 25 US states are suing the Trump administration over these new tariffs. If they win, exporters could get another round of refunds. The Supreme Court already struck down the first set of tariffs, and this new challenge suggests the latest ones could face a similar test in court.

Nintendo's sales numbers for the quarter help explain the revenue drop. The company sold about 0.35 million units of Nintendo Switch 2 software and 0.10 million units of Nintendo Switch 2 hardware during the quarter. For the full fiscal year that ended March 31, 2026, Nintendo reported sales growth of 98.6% to ¥2,313.0 billion and operating profit up 27.5% to ¥360.1 billion, according to Nintendo's May 2026 disclosure. Those full-year numbers were helped by the strong launch of the Switch 2, with 17.37 million Switch 2 units and 155.37 million original Switch units sold as of February 2026.

The bigger picture is that Nintendo depends heavily on customers outside Japan, which makes US trade policy a direct threat to its bottom line. In its February 2026 financial results, Nintendo reported total sales of ¥1,905.8 billion, with ¥1,470.4 billion — or 77.2% — coming from outside Japan. When more than three-quarters of your revenue comes from abroad, and a big chunk of that is from the US, any change in tariffs can hit your profits directly.

This quarter shows how government decisions can shake up a company's finances in ways that have nothing to do with how well the business is run. Nintendo's profit jump was not driven by selling more games, raising prices, or cutting costs. It came from a court ruling and a government refund. The 10% drop in revenue and the 53.5% rise in profit tell completely different stories, and that gap shows how much of Nintendo's performance this quarter was shaped by politics and law rather than by its own operations.

Both sides are still fighting in court, which leaves things unresolved. Nintendo's lawsuit against the White House seeks a full refund plus interest, suggesting the company thinks the $100 billion the government returned did not cover everything it is owed. The customer lawsuit, if it is allowed to go forward, could test a bigger question: if a company raises prices because of a tariff, and then the tariff is refunded, do customers deserve some of that money back? Nintendo's defense is that customers agreed to the price and got what they paid for. But consumer protection laws may apply different standards, and the courts will have to sort that out.