Thanks to the 54% tariff imposed on U.S. imports from China, Apple has a tough decision to make. It can eat the cost of the higher import tax and drop its profit margins on the device by a substantial amount, or it can pass some or all of the increase on to consumers which would raise the price of Apple’s most important product significantly in the U.S. Remember, most of Apple’s devices are made in China and are shipped into the U.S.
Of course, these figures are based on what Apple decides to do about the additional import tax it will pay for its products imported from China. Even lower-priced products like the iPhone 16e face a huge price increase thanks to the tariffs. Released by Apple at the end of February, the launch price of the phone, $599, could look much cheaper compared to the after-tariff $856 price tag forecast by Rosenblatt Securities.
Not all analysts believe that Apple will be able to hike iPhone prices by 43% in light of weak sales due to the lack of excitement over Apple’s AI initiative, Apple Intelligence. For example, Angelo Zino, equity analyst at CFRA Research, says Apple will have a hard time hiking iPhone prices by more than 5% to 10%.
Apple’s shares are reflecting the concern over future iPhone pricing with the stock currently down $21.09 or 9.42% to $202.80. Today’s decline wipes out nearly all of the gains made by the stock since it broke out by closing above $200 last summer. Chartists consider the $200 price a key area of support and a close under that level could indicate that further declines are ahead.
Keep in mind that while we are focusing on the iPhone in this article, other Apple products imported into the U.S. from China are also affected by the tariffs.
