Apple May Implement Global iPhone Price Increases to Mitigate Tariff Impacts [Report]

Apple may implement global iPhone price increases to mitigate tariff impacts, according to a new report from GF Securities analyst Jeff Pu. In a recent investor note, Pu outlines the potential effects of new U.S. tariff policies under the Trump administration on Apple's iPhone production and pricing strategy, as well as the broader PC market. With tariffs on Chinese goods rising and production capacity constraints in non-China regions, Apple faces challenges that could lead to higher costs for everyone.Following a 90-day pause on reciprocal tariffs announced by the Trump administration, a baseline 10% tariff applies to most countries, but for China, tariffs have increased from 104% to 125%. These tariffs, enacted under the International Emergency Economic Powers Act of 1977, are unlikely to offer exemptions for individual companies like Apple. The report notes, "We believe any exemptions would likely apply to broad product categories rather than individual firms." For Apple, this means a significant portion of iPhone production, which relies heavily on China for 83-84% of global capacity, will face higher costs. Right now, India handles about 16-17% of iPhone production, but with the U.S. accounting for 30% of total sales, Apple has to keep shipping a large chunk of units from China, where they'll face those higher tariffs. To cover the added costs, Pu notes that Apple might shift 50% of the tariff burden to consumers by raising iPhone prices globally. The report estimates that for an iPhone 16 Pro Max with 256GB of storage, the bill of materials (BOM) cost is $485. After accounting for manufacturing value add (MVA), import costs, and channel expenses, the total cost rises to $928. With the new tariffs, this cost increases by $404, or 34% of the current selling price of $1199, bringing the new price to $1401. This adjustment would reduce Apple's gross margin on the iPhone from 50% to 27%. Continue ReadingSpotlight Deal:Beats Studio Buds + On Sale for $99.95 [Lowest Price Ever]Share Article:Facebook, Twitter, LinkedIn, Reddit, EmailFollow iClarified:Facebook, Twitter, LinkedIn, Newsletter, App Store, YouTube

Apr 11, 2025 - 17:49

Apple May Implement Global iPhone Price Increases to Mitigate Tariff Impacts [Report]

Apple may implement global iPhone price increases to mitigate tariff impacts, according to a new report from GF Securities analyst Jeff Pu. In a recent investor note, Pu outlines the potential effects of new U.S. tariff policies under the Trump administration on Apple's iPhone production and pricing strategy, as well as the broader PC market. With tariffs on Chinese goods rising and production capacity constraints in non-China regions, Apple faces challenges that could lead to higher costs for everyone.

Following a 90-day pause on reciprocal tariffs announced by the Trump administration, a baseline 10% tariff applies to most countries, but for China, tariffs have increased from 104% to 125%. These tariffs, enacted under the International Emergency Economic Powers Act of 1977, are unlikely to offer exemptions for individual companies like Apple. The report notes, "We believe any exemptions would likely apply to broad product categories rather than individual firms." For Apple, this means a significant portion of iPhone production, which relies heavily on China for 83-84% of global capacity, will face higher costs. Right now, India handles about 16-17% of iPhone production, but with the U.S. accounting for 30% of total sales, Apple has to keep shipping a large chunk of units from China, where they'll face those higher tariffs.

To cover the added costs, Pu notes that Apple might shift 50% of the tariff burden to consumers by raising iPhone prices globally. The report estimates that for an iPhone 16 Pro Max with 256GB of storage, the bill of materials (BOM) cost is $485. After accounting for manufacturing value add (MVA), import costs, and channel expenses, the total cost rises to $928. With the new tariffs, this cost increases by $404, or 34% of the current selling price of $1199, bringing the new price to $1401. This adjustment would reduce Apple's gross margin on the iPhone from 50% to 27%.

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