The analysts believe that the 25 percent tariff could lead to a 14 per cent price hike for the iPhone.
As per a report by Softpedia, CNBC reports that iPhones could soon cost more. They say iPhones are already super-expensive, and the high price has long been considered one of the main reasons people tend to wait more to upgrade their devices.
But if you think the USD 999 iPhone is too expensive, then you should be prepared for another price hike, as the device could end up costing no less than USD 1,142.
This is according to J.P. Morgan’s estimates, as the analysts believe that Apple could raise the price of its flagship product by as much as 14 per cent if Donald Trump’s proposed tariffs on Chinese imports go through.
In short, Trump wants to set a 25 percent tariff on some USD 300 billion worth of Chinese products brought to the United States, and the iPhone could be one of the devices to get hit, as most of the components are sourced from China.
"US production of the iPhone"
The analysts believe that the 25 percent tariff could lead to a 14 percent price hike for the iPhone, which means that the base model, which is now priced at USD 999 in the United States, could end up being sold for nearly USD 1,150.
“We estimate a price increase of around 14 per cent is required to absorb the impact of a 25 per cent tariff, keeping margin dollars for all players in the supply chain constant,” the analysts said in a note to clients according to CNBC.
However, J.P. Morgan says Apple could very well deal with the price increase on its own without passing the costs on to customers, which means the company would have to agree with smaller profit margins.
A second option for Apple is to move production to the United States and thus avoid the new tariffs, but in this case, the final cost of the iPhone could go even higher. Bank of America said, according to the same source, that the iPhone manufacturing cost could be increased by as much as 25 percent should production be transferred to the US.