Donald Trump's recent announcements regarding significant tariff increases on imported products are rocking the global economy. These measures, which notably aim to tax technology products manufactured abroad, will have a direct impact on Apple, the majority of whose production is based in China, Vietnam, and India. They could cause iPhone prices to skyrocket, and the increase could be spectacular.
What to fear
The tariffs imposed by the Trump administration reach up to 54% for products imported from China. According to analysts at Wedbush Securities, this could increase Apple's production costs by 40 to 50 percent, and this could obviously impact the final price of the iPhone. Asked by Le Monde about the possible increase in the price of American products like the iPhone, Sébastien Jean, an economist and professor at the Conservatoire national des arts et métiers, explains: "Yes, undoubtedly, if the decree is applied as is. The most likely outcome is that the United States will apply the customs duty on China, which will now be increased by 54%!".
Some analysts estimate that the price of iPhones could rise by 30 to 43% if the Apple brand were to pass the cost on to consumers. Some scenarios, considered extreme, even suggest a tripling of the price, pushing some high-end models up to $3,500. Note that the impact of customs duties would likely be less significant in France, but Europe would not escape a measure that affects Apple's global supply chain. With a 20% increase, an iPhone 16 currently priced at €969 could see its price tag rise to €1,163. The Pro Max model, the flagship of the range, could jump from €1,479 to nearly €1,775.
The higher the price, the more psychologically significant threshold this would cross for Apple, especially with a base model exceeding €1,000. A situation that could complicate its appeal to consumers.
What could really happen with the iPhone
Still according to economist Sébastien Jean, the "real question" is to know at what price this rate will be applied. "The temptation for Apple will undoubtedly be to dissociate the intellectual property (invoiced separately, intangible and not subject to customs duty) from the tangible object, which in this case could be worth only a fraction of the total (which in any case does not include the distribution margin, which is very high at Apple). If we assume that this fraction is 20%, the customs duty is no more than 10%. Knowing the distribution margin, it is very possible that the final price will only increase by 5% to 10% in this scenario," he explains.
This could greatly limit the increase, as could the geographic diversification movement initiated by the firm. For several years, Apple has been reducing its dependence on China by directing part of its production to India and Vietnam. However, this strategy has its limits, as these countries are not spared from Trump's protectionist aims, with potential tariffs of 46% for Vietnam and 26% for India.
A potentially global impact
Although these customs duties are designed for the American market, the shockwaves could spread globally. To absorb the massive additional costs generated in the United States, Apple could be forced to adjust its price lists in all countries. The American giant, which has suffered colossal stock market losses on Wall Street in recent days, could nevertheless leverage its relationship with the White House to preserve its model and its image. Tim Cook and Donald Trump have grown closer since the latter's return as president.
In any case, the Cupertino company is already preparing for tariff increases, and massively relocating its production to the United States would not be the preferred solution. For the time being, Apple is reportedly moving toward a temporary reduction in its margins, which currently stand at around 45%, in order to maintain product prices.
The company is also reportedly building up inventories to withstand a price increase on its products, at least until their renewal in the second half of 2025. At the same time, the brand is reportedly seeking to pressure its suppliers to obtain better prices and preserve its margins. Even so, the iPhone 17 will have a hard time avoiding a price increase.
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