Will iPhones cost more because of Trump's tariffs on China?

The world's most popular gadgets - phones, laptops, tablets, smartwatches - could be about to get a lot more expensive in the US.

Will iPhones cost more because of Trump's tariffs on China?

Many of them are made in China, which now faces a 125% tariff on its goods imported to the US, under President Donald Trump's controversial trade policy.

And the effect this may have on the iPhone and its maker Apple is under the spotlight.

Some analysts say that if costs incurred by tariffs are passed onto consumers, iPhone prices in the US could rise by hundreds of dollars.

  

Where are iPhones made?

The US is a major market for iPhones and Apple accounted for more than half of its smartphones sales last year, according to Counterpoint Research.

It says as much as 80% of Apple's iPhones intended for US sale are made in China, with the remaining 20% made in India.

Along with fellow smartphone giants such as Samsung, Apple has been trying to diversify its supply chains to avoid over-reliance on China in recent years.

India and Vietnam emerged as frontrunners for additional manufacturing hubs.

As tariffs took effect, Apple reportedly looked to speed up and increase its production of India-produced devices in recent days.

Reuters reported on Thursday that Apple chartered cargo flights to ship more than 600 tons of iPhones from India to the US.

Amid Trump's 90-day pause on tariffs, including those levied on India, the country may be set to benefit from an iPhone manufacturing boost.

The BBC has approached Apple for comment on the impact of tariffs on their operations and prices, but has not had any response yet.

 

How exposed is Apple to tariffs?

Trump and his advisors have said the aim of its tariffs are to encourage more US manufacturing.

However, the tech industry relies on a global network of suppliers for product components and assembly.

This, and finding skilled workers to match the fast pace and low cost of production in Asia, means relocating supply chains is no simple feat.

Apple committed a $500bn investment in the US in February - which the Trump administration believes will result in more homegrown manufacturing.

But Wedbush Securities analyst Dan Ives said shifting parts of its supply chain from cheaper manufacturing hubs in Asia to the US will take a lot of time, and money.

"The reality is it would take 3 years and $30 billion dollars in our estimation to move even 10% of its supply chain from Asia to the US with major disruption in the process," he wrote on X on 3 April.

 

Will iPhone prices go up?

Apple have not revealed yet whether they plan to pass on the costs of the tariffs onto consumers in the US and increase prices.

Some analysts believe Apple is in a more fortunate position than others, having reaped more money from its products than it has spent on making them.

"As a company with lucrative margins on its devices, Apple can absorb some of the tariff-induced cost increases without significant financial impact, at least in the short term," says Forrester principal analyst Dipanjan Chatterjee.

But he notes the company's strong branding and popularity may allow it to pass some costs to consumers without too much backlash.

"The brand commands better loyalty than its competitors, and it is unlikely that a manageable price increase will send these customers fleeing into the arms of Android-based competitors."

Some estimates suggest iPhone prices in the US could as much as triple if costs were passed to consumers.

Following Trump's tariff increase on China to 125%, the cost for a China-made iPhone 16 Pro Max with 256GB storage would have surged from $1,199 to $1,999, according to estimates by investment banking firm UBS.

They estimate a less significant increase on the iPhone 16 Pro 128GB storage - which is made in India - by five percent from $999 to $1046.

While some analysts such as Dan Ives have suggested that the cost of a "Made in USA" iPhone could soar to as much as $3500.

 

What can consumers do about it?

There's still plenty of uncertainty about what happens next, and how companies like Apple will respond to tariffs remains to be seen.

This hasn't stopped some US customers reportedly rushing to Apple stores to buy its smartphones.

And we will likely have to wait until the autumn to see how much the next iPhone will cost.

But if it looks like costs incurred by tariffs will result in higher price tags, some may look to rival handsets or second-hand devices.

The iPhone remains one of the most expensive smartphones on the market - and brands such as Google and Samsung offer phones with similar features at a lower cost.

The other option, and perhaps the most cost-effective, could be to skip upgrades to newer iPhone models and look to slightly older, cheaper versions.

-BBC