Apple Might Hike iPhone Prices Despite Tariff Strategy

When Tim Cook gifted President Donald Trump a gold and glass plaque last month, it was widely perceived on Wall Street as a strategic maneuver to safeguard Apple’s interests amidst ongoing trade tensions. Cook’s efforts, particularly in managing the delicate relationship with the White House, have been closely watched by investors.

The prevailing narrative, echoed by many industry observers, posits that Cook has skillfully navigated the threat of tariffs on Apple’s vast global operations. The pledge of an additional $100 billion U.S. investment, a move readily embraced by Trump as a testament to renewed American manufacturing prowess, further solidified this perception. However, beneath the veneer of a successful diplomatic campaign, the underlying question remains: will these concessions translate into tangible price increases for Apple’s loyal customer base? The answer may materialize later this month. 

“Thank you all, and thank you President Trump for putting American innovation and American jobs front and center,” Cook stated at the event, underscoring Apple’s commitment to a total planned spend of $600 billion in the U.S. over the next five years. Trump, in turn, assured that Apple would receive an exemption from impending tariffs on semiconductors, potentially mitigating a significant cost escalation.

As Apple gears up to unveil its latest iPhone lineup on Tuesday, the specter of price hikes looms large. Despite Cook’s efforts to mitigate the impact of tariffs, a growing chorus of analysts is predicting potential increases across Apple’s product portfolio

“A lot of the chatter is: Will the iPhone go up in price?” observed Jeff Fieldhack, research director at CounterPoint.

While smartphones have largely been shielded from significant price increases thus far, the broader consumer landscape paints a different picture. Retailers are increasingly passing on tariff-related costs to consumers in diverse categories, extending from apparel and footwear to even everyday staples like coffee. Other electronics, most notably in the gaming sector, have already witnessed price adjustments, with companies like Sony, Microsoft, and Nintendo having raised console prices in the U.S. earlier this year.

This trend hasn’t escaped the notice of Wall Street analysts. Edison Lee, an analyst at Jeffries, has factored in a $50 price increase into his iPhone 17 average selling price projections in a note published in July, maintaining a neutral “hold” rating on Apple stock. He cites rising component costs and logistical complexities as potential drivers for such adjustments.

Goldman Sachs’ analysts concur, highlighting the potential for price increases to gradually inflate the average selling price of Apple’s devices. Furthermore, the current product mix appears to be shifting towards higher-end models, a trend that could further compound these effects. This strategic shift reflects Apple’s increasing focus on premium features and experiences.

Analysts anticipate Apple to unveil four new iPhone models this month, likely to be branded as the “iPhone 17” series. Last year’s iPhone 16 lineup comprised four variants: the base iPhone 16 at $829, the iPhone 16 Plus at $899, the iPhone 16 Pro at $999, and the iPhone 16 Pro Max at $1,199.

Supply chain insiders suggest that Apple might discontinue the “Plus” model, which has reportedly underperformed in sales compared to other models. A potential replacement could be a new, slimmer iteration, sacrificing certain camera capabilities and features in favor of a thinner, lighter design.

According to Goldman analysts, the “thinner, lighter form factor may drive some demand interest.” However, tradeoffs, such as potential limitations in battery life, could hinder its competitiveness against Apple’s entry-level offerings. In essence, the design choice could impact user preference, specifically for power users.

Projected pricing for the slimmer device is estimated to be around $899, mirroring the price point of the iPhone 16 Plus. However, analysts haven’t dismissed the possibility of a price increase. Even at that price, it would still undercut Samsung’s Galaxy Edge, a direct competitor, which debuted earlier this year at $1,099.

Apple has not issued a formal response to requests for comment regarding potential price adjustments.

In February, when the Trump administration announced sweeping tariffs on goods imported from China and other nations, Apple seemed squarely in the line of fire.

Given that Apple manufactures the vast majority of its iPhones and other products in China, the imposition of tariffs threatened to significantly inflate Apple’s production costs. Moreover, some of Trump’s proposed “reciprocal” tariffs potentially extended to countries like Vietnam and India, where Apple had strategically diversified its manufacturing operations as a risk-mitigation strategy.

Yet, seven months later, Apple appears to have weathered the tariff storm with greater resilience than many initially expected.

The U.S. government has repeatedly delayed the implementation of the most severe Chinese tariffs, providing temporary respite. Smartphones received a specific exemption from these tariffs, and in May, Apple CEO Tim Cook assured investors that the company had successfully restructured its supply chain to enable iPhone imports from India, where tariff rates are comparatively lower.

Cook has also leveraged his well-established relationship with President Trump, engaging in direct dialogue and visible displays of support, such as the presentation of the commemorative gift during the White House visit in August. This gesture served to reinforce Trump’s agenda of promoting high-tech manufacturing within the U.S. As a reciprocal gesture, Trump pledged to exempt Apple from an imminent semiconductor tariff. Furthermore, Trump’s IEEPA tariffs were deemed illegal in late August, although they remain in effect pending further legal challenges.

Despite these strategic victories, Apple hasn’t entirely escaped the financial ramifications of tariffs. During the June quarter, the company incurred $800 million in tariff-related expenses, largely stemming from the IEEPA-based tariffs on Chinese goods. While this represented less than 4% of Apple’s overall profit, the company warned that tariff expenses could potentially reach $1.1 billion in the current quarter, underscoring the ongoing financial impact.

After absorbing the tariff costs for several months, Apple may be on the verge of shifting the burden onto consumers with the impending launch of the iPhone 17 models.

Apple has maintained a cautious approach to hardware price increases in the U.S. market. Notably, the smaller Pro phone has sustained its initial price of $999 since its introduction in 2017. However, adjustments have occurred in other areas.

In 2020, the company increased the price of its entry-level phones from $699 to $829. Further, in 2022, Apple discontinued the smaller iPhone Mini model, which had a starting price of $699, and replaced it with the larger-screen Plus model, priced at $899. The Pro Max model received a price bump in 2023, rising from $1,099 to its current price of $1,199.

If Apple opts to increase prices on its phones this year, analysts don’t anticipate an explicit attribution to tariffs.

Data from IDC reveals that the average selling price of smartphones globally is on the rise. Moreover, the cost of smartphone components, including camera modules and chips, has been steadily increasing in recent years, driven by technological advancements and supply chain dynamics.

Apple is more likely to emphasize the innovative features of its new iPhones and subtly address the pricing adjustments. Industry analysts expect the new iPhone models to feature larger displays, enhanced memory capacity, and next-generation, faster chips optimized for artificial intelligence (AI) applications. Such upgrades could justify a price increase in the eyes of consumers.

“No one’s going to come out and say it’s related to tariffs,” commented Nabila Popal, IDC analyst.

One potential strategy Apple might employ to subtly raise prices involves discontinuing the entry-level storage configuration, thereby compelling consumers to upgrade to higher storage options at a higher starting price. Apple typically charges a premium of $100 to double the iPhone’s storage capacity from 128GB to 256GB.

Analysts at JPMorgan predict that Apple may unveil such a strategy during the upcoming announcement.

They forecast that Apple will maintain the existing price points for the entry-level and high-end Pro Max models. However, they anticipate the elimination of the entry-level storage option for the Pro model. This would necessitate consumers to purchase an iPhone 17 Pro with a greater amount of base storage than its predecessor, effectively increasing the starting price to $1,099. Apple adopted a similar approach in 2023 when it raised the entry price of the Pro Max model.

“However, with Apple’s recent announcements related to investments in the US, the assumption is that the company will largely be shielded from tariffs, driving expectations for limited pricing changes except for those associated with changes in the base storage configuration for the Pro model,” stated JP Morgan analyst Samik Chatterjee.

Asked about prospective price increases during an earnings call in May, CEO Tim Cook offered a noncommittal response, stating that there was “nothing to announce.”

“I’ll just say that the operational team has done an incredible job around optimizing the supply chain and the inventory,” Cook added, alluding to Apple’s ongoing efforts to mitigate costs through operational efficiencies.