As it turns out, imposing tariffs on countries is the cornerstone of Trump’s economic plans for his new term as POTUS. The White House has already confirmed that a 10 percent “baseline” tariff will be imposed on goods and products imported from all over the world to the United States. However, China, a key player in the US firm's supply chain, is hit with a 54% tariff.
While Trump's new tariffs will impact all sectors and industries, it has serious implications for Big Tech as they mostly rely on countries like China and Mexico to meet their supply chain demands. Apple, the US's biggest smartphone manufacturer, could also face an uphill battle to keep its iPhone prices competitive after new tariffs take effect.
According to Rosenblatt Securities (via Reuters), Apple might need to increase iPhone price by 43 percent if it wants to pass on the cost to the final customers. While Apple has concentrated on India as a new hub for iPhone production and aims to move at least 15 percent of global iPhone production to India by 2025, China still dominates Apple's supply chain. This means iPhones imported from China to the US need to pay a whopping 54% tariff.
For instance, the standard iPhone 16, currently priced at $799, could potentially cost $1,142. The iPhone 16 Pro Max, currently selling for $1,599, could cost around $2,300. Even the budget-friendly iPhone 16e, currently priced at $599, could see a significant increase to $856.
"We expect Apple to hold off on any major increases on phones until this fall when its iPhone 17 is set to launch, as it is typically how it handles planned price hikes,” Rosenblatt Securities analyst said.
Meanwhile, Apple's move away from China and shifting iPhone manufacturing to India and Vietnam still won't exempt it from tariffs. India is already hit with a 27 percent tariff, and Vietnam's imports are also hit with a 46 percent tax.
It's uncertain whether Apple could secure a tariff exemption. If it fails, it could face serious challenges selling iPhones in the US.
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