Apple customers are reportedly in a hurry to upgrade their iPhones to avoid the expected price hikes pushed by President Trump's tariffs.
The looming taxation will collide with a critical portion of Apple's supply chain, including China, where CEO Tim Cook's company still manufactures most of its hardware.
Trump has been set to impose a whopping 104% tariff rate on goods imported from China since Wednesday after China retaliated against his first 54% rate, the White House confirmed. The president also imposed a rate of 46% on Vietnam and a rate of 26% on India. This is the company's other two main production hubs.
Apple's shares fell 5% in Tuesday's trading after first rallied optimism that trade talks would pay off. Meanwhile, Trump believes that “absolutely” Apple can move more iPhone production to the US, according to White House spokesman Caroline Leavitt.
“He believes we have a workforce, we have a workforce and we have the resources to do that,” Levitt said during a press conference. “You know, Apple is investing $500 billion here in the US, so if Apple didn't think the US could do that, they probably wouldn't have made that big change.”
The company's shares have fallen by more than 30% since the beginning of the year.
The latest tariff hike could add even more pain to Apple and its customers than Wall Street originally believed. Based on the initial 54% rate, research firm TechInsights told the Wall Street Journal that the iPhone's manufacturing price could jump from $580 to $850 or more.
Elsewhere, analysts at Rosenblatt Securities said the cost of buying an iPhone could jump to 43%.
Apple has yet to confirm whether it will raise the price of its iPhone in response to increased manufacturing costs or eat a loss to keep the price low.
Still, some customers haven't taken the opportunity.
“You have to deal with your personal needs. There's no question that prices will rise,” said Joel Burke, a 32-year-old policy expert. journal.
Another Apple customer, Allison Post, said plans to upgrade her older iPhone were accelerated due to Trump's tariff announcement.
“The tariffs certainly pushed me out the door,” Post, a 69-year-old health writer, told the Journal. “Why pay for what makes a double?”
Employees at a pair of Apple stores in the San Francisco area said they were citing tariffs as a reason for customers to buy new iPhones.
Apple did not immediately reply to requests for a comment.
Panic over Apple's potential impact on business is likely to be exaggerated, according to Ivan Feinseth, Apple analyst and chief investment officer at Tigress Financial.
The company is already taking steps to mitigate the blow, including a reported plan to move more iPhone production from China to India.
“President Trump is just trying to use this tariff escalation as a platform for negotiations. This is all negotiations,” Fiennes told the Post. “I don't think the end result is as punitive as Apple is as people fear.”
Trump could potentially give Apple an iPhone tariff exemption, as he did during his first term in office, Fiennes added.
He argued that it is unlikely that Apple would enact a major price increase as it is “ecosystem growth” and spend a lot of customers on services such as AI-powered Apple Intelligence.
So far, the president has not yet said whether he will grant an exemption.
Last week, Apple lost more than $300 billion in a day after Trump announced a more tariff slate than expected.
A 9% decline in trading last Thursday marked Apple's worst day performance since September 2020.
