Donald Trump’s trade war has led to a rise in production costs for Apple, potentially affecting the prices of its flagship iPhones.
- Estimated Cost Increase: Up to $296 per iPhone if produced in the U.S., due to Trump’s 54% tariffs on Chinese components.
- Price Hike for Consumers: iPhones’ final price could increase by 25-43%, reaching up to $2,300.
The iPhone 16 Pro, priced at $1,100 for the 256GB version, faces a significant production cost hike. Originally costing Apple $550 for internal hardware, the new tariffs could elevate this to $850.
Impact on Margins: If Apple doesn’t adjust prices, profit margins would shrink drastically. Analyst Barton Crockett of Rosenblatt Securities warns, “You can’t become a $1 trillion device company by pricing your products at cost.”
Market Reaction: The trade war has already affected Apple’s stocks, with April marking the worst performance since the pandemic began in 2020.
Crockett believes that even if Apple moves production to the U.S., numerous imported components would still face high tariffs. Moving assembly operations is a massive task, requiring years and substantial labor costs. Shifting from $30 per phone in China to $300 in the U.S. for assembly could make competitive pricing challenging.
iPhone Price Examples:
- iPhone 16 (base model): Could rise from $799 to $1,143.
- iPhone 16 Pro Max: From $1,599 to $2,300 for the top-tier 1TB model.
Previously, during Trump’s first term, Apple received exemptions from various Chinese import tariffs. However, no such exemptions have been announced for this second term, leaving Apple vulnerable to these increased costs. As the world’s second-largest company by value, Apple stands to be significantly impacted.
