So far, Apple is choosing to absorb the additional costs imposed by tariffs on goods imported to the US. But the iPhone will almost undoubtedly get more expensive after June – why?
Right after US President Donald Trump announced a series of new sweeping tariffs on April 2nd, most headlines and predictions were pretty grim. Reuters, for instance, said that a new iPhone could cost as much as $2300.
A month later, nothing like that has happened – for several reasons. First, the Trump administration has exempted smartphones, computers, and some other devices from “reciprocal” tariffs, including the 125% levies imposed on Chinese imports.
Naturally, Apple and other large tech companies breathed a huge sigh of relief. As much as 80% of iPhones intended for US sale are made in China, with the remaining 20% manufactured in India.
That’s actually another reason the price of the iPhone is not going up by much so far. During the May 1st earnings call, Apple CEO Tim Cook revealed that iPhones sold in the US are currently coming from India.
Still, Cook also said that some other Apple products, such as accessories, weren’t exempt from the new tariffs, and, anyway, the pause on these is set to expire after June.
The company already expects about $900 million in additional costs from tariffs for the fiscal third quarter ending in June.
Tariffs on goods from India have an older 10% tariff, and iPhones manufactured in China are still subject to Trump's 20% “fentanyl tariff” for the country's supposed role in allowing fentanyl to enter America.
Of course, since Apple posted quarterly revenue of #95 billion (up 5% YoY), the impact doesn’t seem huge. But nearly $1 billion in extra costs comes directly out of profits, which is clearly not ideal for the tech giant.
Most companies pass all or part of the tariff costs on to consumers, so Apple might do the same. It’s absorbing the impact of the levies now, but the company has a reputation on Wall Street for protecting its profit margins.
Quite a few estimates see Apple raising the price for most of the newer iPhone models by $50. That’s the minimum, others say, because Apple sources components for its products from a long list of countries that could also face higher tariffs after the pause.
However, the math could go the other way. Apple could spread the additional costs across all its products, not just iPhones – that would reduce the iPhone-specific increase.
Plus, the company could plan the price hike for the iPhone 17’s expected launch in mid-September – it just makes more sense to introduce higher prices for brand-new products. And Trump might announce another pause – a lot of what the US president is doing looks like a bluff these days.
Finally, even if the increase becomes reality, it’s not going to be substantial, and Apple would surely bury it in promotional deals or installment plans.
If a new iPhone costs $50 more but the extra money is spread over, say, 24 months, there’s no real financial pain for the consumer.
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