Apple may be able to delay price increases, but not for long
In the face of crippling tariffs, Apple will have to raise prices of popular items like the iPhone in the US and elsewhere -- but is trying to delay increases until the next set of hardware upgrades.
The iPhone and other Apple products will be getting more expensive due to tariffs.
A new report suggests that Apple is pursuing several different initiatives in an effort to mitigate the cost increases of tariffs imposed by the United States and other countries on its flagship products. That said, US consumers should expect to see the price go up in the near future on iPhones, Macs, and other hardware products.
While Apple has spent years diversifying its production facilities away from China, almost all of the countries it has set up shop in -- such as Brazil, India, and Vietnam -- also face withering import tariffs. According to Bloomberg, the company is said to be pursuing a diverse range of strategies to soften the blow as much as possible.
Prices will rise due to tariffs
It's now estimated that moving production fully to the US could double the prices of Apple products. If true, absorbing and mitigating the current tariffs is actually Apple's best option under the present circumstances.
Though Apple has some US-based manufacturing facilities, it accounts for a small fraction of the company's total output. Chipmaker TSMC has recently opened a US-based plant for future chip production, but is far from meeting demand from tech companies like Apple in the short term.
It's possible that the company could increase US manufacturing as President Trump believes will happen, but if that is even possible, it would take years and not change how Apple requires raw materials that will always have to be imported.
Plus, by the time any new US manufacturing is able to make more than a fractional contribution to Apple's supply chain, the current tariffs are expected to have been withdrawn. Even if Congress does not revoke them, the way the tariffs were calculated suggests that they could be unpredictably revised upwards or downwards.
Consequently, rather than moving production to the US, Apple will attempt to reduce the impact of the tariffs that it cannot avoid. There are options that the company is doubtlessly pursuing, but there are non that will mean Apple can avoid raising prices.
For instance, Apple could absorb some of the increased costs by temporarily lowering its profit margins. Currently, the average markup on Apple products is around 45 percent.
In the short term, Apple may do this and lower its margins to keep current product prices the same for as long as possible. The company is also expected to put pressure on its manufacturing partners and component suppliers to lower their prices, though it's unclear how much room there can be for any reductions in supply costs.
Similarly, Apple is presumed to be researching ways to avoid tariffs where possible through other supply-chain changes. Strategies could include engaging in more direct shipping from production facilities directly to non-US markets, avoiding the tariff increases coming from and directed at US exports and imports.
New products will get higher prices
In an effort to delay price increases for as long as possible, Apple is said to have been stockpiling existing inventory. If true, this could mean that Apple would resist raising prices on its most popular items, such as the current iPhones and iPads, until the products are refreshed in the second half of 2025, depending on how large a stockpile it was able to build.
Unless there is a change in the tariffs, price increases on forthcoming Apple devices will be significant. Reports estimate that the cost of an iPhone 17 Pro model could rise to $2,000 or more due to the tariffs and resulting trade wars.
Apple is far from alone in having to deal with tariffs that are going to see its customers having to pay more. US consumers are going to be hit by price increases across practically every product category, from technology to groceries.
This is a major reason why Apple, along with other affected US companies, has seen its stock price take a hit from the tariffs. There are fears that the US economy could enter a recession, causing consumers to put off all big purchases -- exacerbating the effect and continuing market chaos in the US.
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Additionally, Apple is a US company so a tariff may be added to goods entering, say, Canada, despite the product having its finally assembly and shipping in China.
Interestingly the place we got our phones (our cell provider store) was almost out of 16s. This morning he had no 16e units, one 16, 16Pro, and 16Pro Max. We took the 16 and 16Pro. He said that his supplier was almost out of everything too. The last few days he’s seen a huge rush of people updating for the same reason.
Gorilla Glass, as a notable example, is a product of the American company Corning and is manufactured in Kentucky, USA (with other manufacturing facilities throughout the world). If countries slap retaliatory tariffs on made in the USA products (without any exceptions), it could increase the cost of Gorilla Glass manufactured in Kentucky (and sold and shipped to companies in non-American countries).
Additionally, there are memory component companies with manufacturing facilities in America. There are radio frequency chip component companies with manufacturing facilities in America. Etcetera and so on.
Some people incorrectly think that “global supply chain” is code for “Asia-only supply chain”. But It’s truly a global supply chain (and that includes the United States).
A similar thing happened (/is still happening) during the inflation crisis. Companies raised prices higher than the actual cost of inflation. And those companies did their best to hide that fact from the consumers they were price-gouging (while trumpeting that same price-gouging on earnings conference calls with financial analysts).
Don’t get me wrong: Most companies do not want this tariff war. But since a tariff war is we have, companies will do what companies typically do. Some companies are going to raise prices higher than the cost of the tariffs and they won’t want us to know.