The new global customs duties could completely transform international trade, and consumer products, such as iPhones, are among the most affected, analysts warn. If Apple were to pass on the costs to customers, prices could increase by 30%-40%.
Most iPhones are produced in China, a country affected by a 54% tariff. If these taxes remain in place, Apple will feel a significant impact. Already, the company’s shares have dropped by over 8% after the announcement of the tariffs, marking the worst stock market day for the tech giant since September 2020, writes Reuters.
Apple sells over 220 million iPhones annually, with the main markets being the USA, China, and Europe. The cheapest iPhone 16 model currently has a launch price of $799 in the USA, but it could reach $1,142, according to Rosenblatt Securities' estimates.
For the iPhone 16 Pro Max model, with a 6.9-inch screen and 1 TB of storage, the current price of $1,599 could increase to $2,300.
Apple at a Standstill: Price Increases and Declining Sales
In his first term, Trump imposed tariffs on Chinese imports in an attempt to force American companies to relocate their production to the USA or neighboring countries like Mexico. Apple obtained certain exemptions at that time, but this time, the company did not receive any exemptions.
"The entire strategy of tariffs applied to China is now evolving completely differently from our expectations. We thought that Apple, an American symbol, would be protected, but it seems that is not the case," said Barton Crockett, an analyst at Rosenblatt Securities.
The iPhone 16e model, launched in February as an affordable option for users interested in Apple's AI-based features, currently has a price of $599. A 43% increase would bring it to $856. Other Apple products could also be affected.
Although Apple has not provided an official comment, many users purchase their phones through 2-3 year contracts with mobile service providers, which could mitigate the impact of immediate price increases. However, iPhone sales are already declining, and the Apple Intelligence package – which promises AI functions like notification summarization and access to ChatGPT – has not convinced users to upgrade to new models.
Analysts warn that if demand for iPhones continues to stagnate and tariffs increase production costs, Apple may have difficulty passing on the entire price hike to consumers. "The company will have major difficulties transferring more than 5%-10% of costs to customers," said Angelo Zino, a market analyst at CFRA Research.