[News] Trump’s Tariff Policy Could Reportedly Raise iPhone Prices by USD 240

---

---

According to a report from MoneyDJ, citing Barron’s, newly-elected U.S. President Trump has threatened to impose a 60% tariff on Chinese imports and a 10%-20% tariff on goods from other regions. These tariffs could increase the cost of each iPhone by up to USD 240.

The Barron’s report noted that last year, the U.S. imported approximately USD 4 trillion worth of goods and services, with USD 433 billion coming from China, including about USD 42 billion worth of smartphones. Furthermore, more than 80% of imported smartphones are from China, and domestic production capacity in the U.S. is limited.

The price of an iPhone 16 in the U.S. is USD 799, with approximately 45%-50% of the cost per iPhone attributed to imported components. If a 60% tariff is imposed on these imported parts, each iPhone 16 would face an additional tax burden of USD 216 to USD 240, resulting in an effective tax rate of 27%-30%, as the report pointed out.

On the other hand, the report noted that since some internal parts are domestically produced in the U.S., and costs like retail and advertising are excluded from the tariff, the tariff would apply specifically to the imported parts of the device only.

In the fiscal year 2024, Apple’s product gross margin was 37% (excluding any tariffs), as mentioned by the report.

The report indicated that if the 60% tariff significantly affects Apple, the company may need to either reduce its profit margins or raise prices to manage the impact. Raising prices could weaken market demand, while absorbing the tariff costs and compressing its margins would likely affect earnings.

Although Apple could face challenges from Trump’s tariff policy, the report also highlighted that several countries benefited from the U.S.-China tariffs during Trump’s first term. For example, since 2018, Vietnam’s exports to the U.S. surged by 170%, an annual growth rate of 18%. The report noted that to mitigate tariff-related issues, Apple may consider shifting more assembly lines to India.

Read more

• [News] TSMC May Face Potential Tax Hikes in the Trump 2.0 Era
• [News] How will a fully Republican administration impact the future trajectory of the U.S. economy?

(Photo credit: Apple)