Potential Increase in iPhone Cost Instead of Tariff Adjustments
Going for the iPhone 16 instead of waiting for the iPhone 17 might be a smart move, given the potential price hikes due to Trump's tariffs. Here's the lowdown on the situation from a more modern perspective:
Time to pull out your wallet and consider snagging the iPhone 16 before the iPhone 17 drops, especially if your bank account could use a break. Prepare yourself for tech prices to climb since Trump's tariffs aren't about to let up on Apple's products just yet. The question remains: how much more costly can iPhones get?
Recent rumblings from financial analysts suggest that the top-tier iPhone 16 Pro Max with 1TB storage could jump from $1,599 to a staggering $2,300 if these tariffs land as projected. The regular iPhone 16 might also experience a boost, going from $800 to $1,142 according to predictions from Rosenblatt Securities.
If those forecasts pan out, it probably won't impact current iPhone 16 inventories, but the iPhone 17 could feel the heat, given that analysts claim Apple's stockpiled U.S.-bound iPhones in anticipation of these tax hikes. Trump has also hinted at tougher tariffs on semiconductor makers, which could potentially drive costs even higher.
However, all is not lost – Mark Gurman from Bloomberg shares that things might be more complex than they seem. Apple could jack up prices to cover tariff costs, but Gurman suspects the company may decide to absorb some of those expenses itself.
Apple's supply chain is wide-reaching, spanning China and increasingly India. Gurman points out that the company builds iPhones in both countries, with India boasting a smaller, 26% tariff compared to the total 54% levy on Chinese imports. Subsequently, Apple could shift more production to India, yet that process takes time and money. Trump's tariffs are said to kick in by April 9, barring any last-minute waffling.
Apple values its brand reputation more than some other tech companies, especially regarding consumer perception. Saddling the iPhone with a higher price tag might dilute enthusiasm for its upcoming devices. The last time Apple rose prices on its premium phones was in 2017 with the iPhone X. However, the regular iPhone has seen fluctuating costs. The iPhone 8 was $700 in 2017, and the trend continued until the iPhone 11 in 2019. The 2020 iPhone 12 began at $800, which is the same price as the 2021 iPhone 16. Accordingly, the iPhone seems ripe for a price hike, tariffs or no.
However, these discussions of rising prices overlook Apple's global iPhone sales decline in the last couple of smartphone generations. The tech giant's quarterly earnings report in January missed Wall Street's iPhone sales expectations, primarily due to shortcomings in China's market. A pricier iPhone would discourage more people from upgrading, especially amid the looming economic uncertainty.
Remember when President Donald Trump started tariffs around 2018? Apple CEO Tim Cook successfully lobbied the president to spare his company's products. Cook even dropped $1 million on the president's inauguration, landing himself a prime seat at the event behind 47 other tech industry elites, ready to pay homage to Trump. Although few expected the White House to wage a full-blown trade war against the entire world, it seems US consumers and lower-level workers will bear the brunt of these tariffs.
- The iPhone 17 might face higher costs due to the ongoing tariffs, just as predictions suggest the iPhone 16 Pro Max with 1TB storage could rise from $1,599 to $2,300.
- The tariffs could potentially drive up the cost of the regular iPhone 16 as well, with estimates from Rosenblatt Securities pointing to a possible increase from $800 to $1,142.
- In response to the tariffs, Apple might decide to absorb some of the expenses itself instead of raising the prices drastically, following the last price increase on its premium phones in 2017 with the iPhone X.
- Apple's global iPhone sales have been declining in the past few generations, and a pricier iPhone could further discourage upgrades, especially in the face of economic uncertainty, as evidenced by the tech giant's missed iPhone sales expectations in China's market.
