Why the iPhone Could Soon Cost More Than Ever

© Ibrahim Boran/Lemon squeezer

The standoff between Donald Trump and China is seriously worrying Apple. The American president has just imposed 10% customs tariffs on Chinese imports. Needless to say, this makes Apple CEO Tim Cook tremble, while 95% of iPhones are assembled in China.

A storm that threatens Apple and its consumers

The situation is much more complex than in 2019, when Tim Cook – at the time called Tim Apple by the American president – managed to avoid Trump taxes by playing the card of competition with Samsung. This time, the geopolitical context has changed radically. Tensions between Washington and Beijing have escalated considerably, particularly around Taiwan and semiconductors. China has just taken retaliatory measures that could hit Apple hard.

The Middle Kingdom has several levers to put pressure on the Californian giant. First among them: the Chinese market itself, which represents nearly 20% of iPhone sales worldwide. Beijing could also complicate the lives of Apple's subcontractors like Foxconn, which employs hundreds of thousands of people in its Chinese factories.

Faced with these threats, Apple has begun to diversify its production, particularly in India. But outsourcing the assembly of millions of iPhones takes time and is very expensive. Especially since China has a unique industrial ecosystem, the result of decades of investment.

The specter of a historic price increase

© Shutterstock

Analysts are adamant: Apple doesn't 8217;will have only two options. Either absorb the additional cost of 10% and see its margins melt, or pass it on to the final price. And it is this second option that seems the most likely.

200% Deposit Bonus up to €3,000 180% First Deposit Bonus up to $20,000

“Apple has always favored its margins“, explains William Kerwin, analyst at Morningstar. “The company has already increased the price of the iPhone Pro Max by $100 in 2023. With the new taxes, we could see even bigger increases“.

A 10% increase in the price of iPhones would represent a historic turning point. The iPhone 16 Pro Max, already sold for 1479 euros, could then easily cross the symbolic threshold of 1500 euros. A price that risks making even Apple's most loyal customers think twice.

This situation comes at a time when the apple brand is already facing fierce competition in China. Local manufacturers like Xiaomi, Oppo and Vivo are eating into market share with high-end smartphones that are priced much cheaper than the iPhone. A price hike would only potentially accelerate this trend.

The situation is all the more delicate because Mexico and Canada are also in Trump's sights. These two countries are also threatening to take retaliatory measures that could affect Apple's sales in North America.

Tim Cook's impossible equation

Tim Cook finds himself in an extremely delicate position. Apple's CEO must juggle the demands of Wall Street, which is closely monitoring the company's margins, with the need to maintain competitive prices in an increasingly competitive smartphone market.

The solution could come from an acceleration of the geographic diversification of production. Apple has already started producing iPhones in India and is exploring opportunities in Vietnam. But these alternatives will not be able to replace China overnight.

• Trump has just imposed 10% tariffs on Chinese imports
• Apple, which produces 95% of its iPhones in China, may have to significantly increase its prices
• This time, it seems that an exception is not in order, unlike the situation in 2019

📍 For Don't miss any Presse-citron news, follow us on Google News and WhatsApp.

[ ]