Tech giant Apple is considering raising the prices of its popular iPhones this fall. The Wall Street Journal reports that the company is reluctant to blame the cost increase on the tariff war between the Trump administration and China, but Apple is facing increased production costs due to the tariffs.
How would tariffs impact iPhone costs?
Most Apple devices are made in China. Despite a deal announced on Monday, May 12, that would see the U.S. place 30% tariffs on Chinese imports while the two countries negotiate over the next 90 days, a 20% tariff remains in place on the country, which also impacts smartphones.
Economic impact
Around 90% of Apple devices are made in China, where a 20% tariff from the Trump administration is in place, prompting Apple to consider raising prices.
The U.S.-China trade war has threatened Apple’s supply chain. The Journal reports that Apple CEO Tim Cook has shifted some manufacturing to India while also bumping up inventory. Cook had stated that a majority of iPhones in the second quarter, ending in June, would come from India.
The report indicates that more costly iPhones, such as the Pro and Pro Max, which have larger batteries and improved cameras, will still be made in China, as India’s facilities are not capable of mass producing those models like China can. Apple also produces some of its products in Vietnam.
Upping costs
Reports indicate that Apple sold more than 60 million iPhones in the U.S. last year. However, Apple reportedly would have a difficult time compensating for the cost of the tariffs unless it raises prices. Cook pegs those costs at $900 million in the current quarter.
Apple often unveils its new iPhone models in the fall, with the possibility that the next lineup will be the iPhone 17. Currently, the iPhone 16 is priced at $799, while the iPhone 16 Plus costs $899 and the iPhone 16 Pro Max begins at about $1200. One new feature that could accompany a price hike is said to be an ultra-thin design.
Can Apple move production to the United States?
Apple is also examining how to move iPhone production to the United States. In February, the company announced a plan to spend $500 billion in the U.S. on operations, including server and chip factories. However, that expansion could take years.
