We find ourselves amidst an intensifying worldwide trade conflict initiated by the punitive tariffs introduced by U.S. President Donald Trump, with indications suggesting that some of our most cherished technological devices, such as the iconic iPhone, could bear the brunt of this economic clash.
Prices for the iPhone 16 are not expected to increase in the near future, however. The primary challenge for Apple maintaining its current and upcoming iPhone pricing could be the disastrous notion of manufacturing their devices in the United States.
Initially, we should examine how tariffs will affect the short-term pricing of iPhones. Currently, Apple manufactures approximately 85% of its iPhones in China. a nation where Trump has recently implemented a 104% tariff. China responded with 84% tariffs. on imported US goods.
I've seen some analysts predicting that tariffs could cause iPhone prices to double , putting the latest best iPhones For more than $2,000. Nevertheless, I doubt that will occur.
Hold the line
For now, at least, Apple has no plans to alter the pricing of the iPhone 16 series; they are deeply committed to getting devices into customers’ hands. Although Apple operates on a Just-In-Time (JIT) production strategy—manufacturing only what is sold—to avoid having large inventories sitting unsold in stores and warehouses, they do maintain certain stock levels.
And as far as we can tell, Apple might have increased manufacturing and shipments to the U.S. in preparation for these tariffs (Nintendo). might have achieved precisely that with its latest Switch 2 ).
Bringing all iPhone production to the U.S. comes with numerous challenges such as increased expenses, pricier workforce, and the impact of extensive automation, which contradicts the aim of generating additional employment opportunities.
Tim Bajarin
It's reasonable to be concerned about that. iPhone 17 Prices might increase due to the tariffs, however, I believe Apple will strive to keep them steady, largely because of their emphasis on various services such as Apple News, Apple TV+, iCloud, Fitness+, and Apple Music.
If you look at Apple earnings The fastest-growing sector for Apple, and its most dependable source of income apart from iPhones, is its services division. Services are primarily sold through hardware sales, and increasing iPhone prices substantially due to tariffs could deter customers from purchasing more devices, thus impacting this revenue stream.
From my perspective, however, an even more significant danger to iPhone prices stems from tariffs. These were implemented by Trump partly with the intention of encouraging U.S. companies to relocate their manufacturing processes back to America. He firmly believes that this will have positive effects. The US possesses the manpower, workforce, and natural resources. to manufacture the iPhone in the US.
He's wrong.
Let's imagine, though, that he convinces or coerces Apple into a full-scale upheaval and transfer of iPhone production from China, India, and other countries to the US. How would that work? And what might that mean for the price of your next iPhone?
Initially, recognize that despite assembling iPhones within the U.S., most components would still come from overseas manufacturing facilities. About two years back, ArcGIS StoryMaps created an intriguing graphic illustrating this aspect. origins of manufacturing for every iPhone part . Here are some examples:
- Battery: South Korea (Samsung)
- Camera: Japan (Sony)
- Glass: Australia (Corning)
- Touchscreen: Greece (Boradcom)
- Audio chip: Singapore (Cirrus Logic)
- Gyroscope: Switzerland (STMicroelectronics)
Almost every country has now faced a basic 10% US tariff imposition. And some nations, such as Japan, confront even greater costs. According to these tariffs, parts delivered directly to an American Apple iPhone factory might end up costing more than those transported to a facility in China, unless Apple receives exemptions for relocating its production processes to the U.S. The prices will surely not decrease.
I talked with an experienced observer of Apple Watches as well as an industry analyst. Creative Strategies Chairman Tim Bajarin discussed this via email, and he commented, “It would be quite challenging to manufacture iPhones in the U.S. The parts for these devices originate globally and must be put together at the lowest possible cost. That’s precisely why the U.S. ceded manufacturing to nations such as Japan and later China during the 1960s.”
Many electronic devices are constructed this way, with components manufactured across different regions globally and then put together in the location where production costs are lowest.
Bajarin further notes, "Transferring all iPhone production to the U.S. comes with numerous challenges such as increased expenses, pricier workforce, and the impact of complete automation, which contradicts the aim of generating additional employment opportunities."
Most iPhones continue to be put together by Foxconn in Shenzhen, China, where workers earn slightly under $3 per hour . US workers would expect to make at least the minimum wage ($7.25 federally); and if factory workers are unionized, they would likely earn more and expect benefits.
It’s difficult to envision how manufacturing an iPhone in the U.S., employing American workers at equitable pay rates, wouldn’t come at a higher cost compared to producing it in India or China.
Apple's plan
Apple hasn't addressed the tariffs explicitly or outlined its response publicly (I have reached out to Apple for comment), but it has dedicated to spending $500 billion when building facilities and recruiting staff in the US. Importantly, this effort isn’t aimed at setting up plants capable of manufacturing iPhones. Rather, these new sites will be used to construct servers that will back Apple’s extensive operations. Apple Intelligence other artificial intelligence initiatives in cloud computing and push projects.
In the end, the immediate danger to the cost of our iPhones isn’t really these tariffs; it’s the notion that they should be assembled in the U.S. This concept is flawed from the start. I believe Apple understands this too, which explains why nothing like that will take place soon, and consequently, your iPhone prices may stay consistent for now.
Are you willing to spend extra money on your upcoming iPhone? April 9, 2025
Should these tariffs persist throughout the year, they may force a shift in strategy. In such a scenario, Apple might strive to maintain current pricing despite increased costs, potentially taking losses on the iPhone 17 to keep expanding both its customer base and service subscriptions. However, this approach isn’t viable over the long term. At some juncture, I believe Apple will likely conclude that it must pass part of these additional expenses onto consumers.
For consumers, there appears to be a willingness, albeit anecdotal, to spend a bit extra on iPhones. In a survey conducted on X, I queried whether individuals would opt to pay more for their subsequent iPhone. Slightly over half responded with a firm ‘No,’ however nearly 35% indicated their stance was contingent upon the price increase. Devotees of the iPhone are prepared to bear some financial burden to acquire their preferred device, provided the additional cost isn’t excessive.
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