Apple iPhones are about to get more expensive following the rollout of a new wave of tariffs by the U.S. President Donald Trump.
With China hit by a 54% levy, the company could see iPhone prices rise by up to 40% if the tariffs remain in place.
For a company that sells over 220 million iPhones annually, this is no small problem. Most of its production is in China, despite initial trials to move some assembly to Vietnam and India—both of which have been slapped with their own hefty tariffs of 46% and 26%, respectively. Apple must now decide whether to absorb the extra costs or pass them directly to consumers.
Per Reuters, the base model iPhone 16, currently priced at $799, could shoot up to $1,142, according to analysts at Rosenblatt Securities.
The high-end iPhone 16 Pro Max, which now sells for $1,599, may climb to nearly $2,300 if the full tariff impact is transferred to buyers. Even the supposedly affordable iPhone 16e, introduced at $599, could end up costing around $856.
The market wasted no time in responding. Apple’s stock tumbled 9.3% on Thursday, its worst single-day drop since March 2020. Investors are clearly nervous, and for good reason.
The combination of high costs, slowing iPhone sales, and stiff competition from Samsung could spell serious issues for the tech giant.
“This whole China tariff thing is playing out right now completely contrary to our expectation that American icon Apple would be kid-gloved, like last time,” said Barton Crockett, an analyst at Rosenblatt Securities.
Apple has historically relied on its brand loyalty and premium status to justify high prices. But in a market already showing signs of fatigue, a 40% price hike might be too much for even its most devoted customers.
Many buyers spread their payments over two or three years through carrier contracts, but a steep increase could still deter new purchases. More worryingly, Apple’s latest feature upgrades—including its AI-driven Apple Intelligence—haven’t been compelling enough to drive an upgrade frenzy.
Even if Apple tries to soften the blow, analysts like Angelo Zino from CFRA Research are sceptical. “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,” he said.
Trump’s tariff strategy is nothing new. During his first term, he slapped import duties on Chinese goods, aiming to force American companies to shift manufacturing back to the U.S. or nearby countries like Mexico. At the time, Apple managed to secure exemptions. This time, those lifelines haven’t been granted.
If the tariffs remain in place, Apple would need to raise iPhone prices by an average of 30% just to offset the increased import costs, according to Counterpoint Research co-founder Neil Shah. The ripple effect could hit the entire consumer electronics sector, as suppliers and retailers adjust their pricing strategies.
The consequences of Trump’s trade issues go far beyond Apple. The European Union, already facing 20% tariffs on its exports to the U.S., is preparing to respond. China has vowed retaliation against Trump’s 54% levies, and other major trading partners, including Japan, South Korea, and India, are weighing their next moves.
The financial markets are in turmoil. The Dow plunged nearly 4%, while the tech-heavy Nasdaq suffered a 6% drop—its worst day since the early pandemic days of 2020. Apple isn’t alone in feeling the heat. Nike’s shares tanked by 14%, and other companies heavily dependent on overseas manufacturing also took a hit.
For Apple, the next few months will be sensitive. If it absorbs the costs, its profit margins will shrink. If it passes them on, sales may nosedive. Either way, the company faces one of its biggest challenges in years.
Meanwhile, all eyes are on the White House. Trump insists these tariffs are a way to negotiate better trade deals. But with a global recession looming, experts warn that this aggressive approach could backfire.
“This could blow up Apple, potentially costing the company up to $40 billion,” warned Crockett.
