Apple iPhone price rises: Will Apple raise the price of iPhone to $2,300 after being hit by Donald Trump’s tariffs?
After the top 20% tariff rate on Chinese imports was high in January last year, the government increased retaliatory tariffs by 34% to existing tariffs, reducing it to 54%.
The policy aims to promote domestic production and may seriously affect consumer prices, especially Apple’s flagship smartphones.
Apple produces most of its 200 million iPhones in China every year, and is now a crossroads of these economic policies.
The latest round of tariffs will force the technology giant to absorb costs or pass them on to consumers, while the price is huge.
iPhone is the hardest
Apple’s high-profit business model has few other options. Analysts say iPhone costs could grow as much as 43% if the company is to push costs to customers. Daniel Ives of Wedbush Securities estimates that the iPhone could hit $2,300 in this case. Even the cheapest iPhone 16e, now at $600, could increase to $858, according to USA Today.
CFRA research analyst Angelo Zino expects Apple will stick to a sharp rise before launching the iPhone 17 later this year.
Apple’s stock takes a hit
Apple’s shares fell 9% on Thursday to close at $203.18 due to concerns about the financial costs of the tariffs.
The steep decline is the company’s worst situation since September 2020, which is in line with wider market concerns about the growth of trade tensions.
Although the Trump administration has previously imposed tariffs on Chinese imports, it has previously exempted iPhones.
In this case, the absence of such a waiver has led to speculation that Apple may approach the White House for negotiations to remedy.
Can Apple be exempted?
Apple CEO Tim Cook stayed in good contact with Trump, visited his inauguration and pledged a $500 billion investment in the U.S. business, including a factory in Texas and 20,000 new R&D positions.
Even with these gestures, analysts don’t believe Apple can escape tariffs.
Barton Crockett of Rosenblatt Securities estimates that tariffs will cost as much as $40 billion.
Zino agreed, suggesting that while an exemption could occur, investors still couldn’t count on it, according to the USA Today report.
He added that Trump’s current position in China is more hostile than in the first semester.
Move to the United States
The tariffs are designed to force companies to produce in the United States, but analysts claim it is unrealistic. This will lead to immediate rises in U.S. consumers in an already inflationary environment, Counterpoint Research said.
Making smartphones locally will require substantial subsidies, reducing labor costs and substantial infrastructure investment.
Neil Shah, vice president of research at Counterpoint, underscores the possibility, saying “the cost advantage in the U.S. manufacturing is zero” Wedbush Securities Ives Ives has moved it for three years, moving 10% of Apple’s supply chain out of Asia for just $30 billion.
For American consumers, the $1,000 iPhone becomes one of the most exquisite consumer products that will evaporate reality. In theory, making an iPhone here sounds good, but in reality, it’s still an unrealistic dream.
FAQ
What tariffs has Trump imposed on Apple’s impact?
The new tariffs include a 54% levy on goods imported from China, a 26% levy on India’s imports, and a 46% levy on imports from Vietnam – three key areas in Apple’s manufacturing supply chain.
How much has Apple’s stock fallen?
Apple’s shares fell more than 9% after the tariff announcement, marking the worst single-day decline since September 2020.
