The price of owning the latest iPhone is about to get even more expensive, thanks to President Donald Trump’s new tariffs on Chinese imports.
While the leading tech giant Apple has weathered previous storms with strategic negotiations and supply chain ingenuity, this new wave of tariffs presents a serious test to their pricing strategy.
So, what exactly can iPhone buyers expect in the wake of these tariff hikes?
A price increase looms
Since the announcement of the sweeping 104 per cent tariff on Chinese imports, tech firms have braced for a significant hit to their profit margins.
Analysts have estimated that, for Apple, this tariff could lead to an estimated price hike of 20-25 per cent.
This means that the $1,599 (£1,248) iPhone Pro Max, for example might see its price tag climb as high as $1,900.
While that’s certainly a notable bump, Kate Leaman, chief market analyst at Ava Trade, explained that it may not be the catastrophic $2,300 that some have speculated.
“A 54 per cent tariff on $1,599 iPhone 16 pro max could technically push retail prices north of $2,400,” she said.
But, Apple is unlikely to pass the full impact on to consumers.
Historically, the company has absorbed a portion of tariff-induced cost increases through margin compression.
Leaman noted: “Apple tends to absorb 10 to 15 per cent of shocks through margin compression and supply chain efficiencies.”
She suggested that we can therefore expect price hikes on the more conservative side of predictions, and that “we would likely be looking at a top-end iPhone maxing out around $1,900 by year-end.”
Apple’s response
Apple is no stranger to navigating political hurdles, and it’s unlikely to simply accept the higher costs without attempting to mitigate damage.
Tim Cook and his team have a well-established history of negotiating with the US government to secure more favourable terms for their products, and this scenario will likely be no different.
Apple is already exploring options like relocating to lower tariff countries like India.
In the long term, Apple may find ways to absorb a portion of the increased costs through clever supply chain management or by increasing the production capacity of non-Chinese facilities.
However, the bigger question is how much Apple will pass onto customers. Analysts have agreed that Apple will likely absorb a portion of the impact, yet price hikes of some form seem all but certain.
Apple was approached for comment.
Consumer impact
Even with price increases on the horizon, Dipanjan Chatterjee, vice president at Forrester, believes Apple’s iPhones are unlikely to lose their place at the front of the market.
People are too entrenched in their Apple ecosystems to easily break from the brand,” he said.
The loyalty the firm has cultivated over the years is powerful, and it could give the tech giant some leeway to increase prices without losing a significant portion of its customer base.
That said, rival brands like Samsung which may be less affected by tariffs, could increase competition.
If Apple does pass along the full cost of tariffs, more price-conscious consumers might start to consider alternatives.