The next iPhone might be more expensive, regardless of tariffs

Apple may raise iPhone prices in 2025, possibly up to $2,300 for top models.

: Apple is facing potential price hikes for the iPhone 17 due to impending tariffs initiated by the Trump administration. Projections suggest significant increases, with the iPhone 17 potentially reaching $2,300 for high-end models. Factors include the cost of outsourcing production and the strategic shift to newer manufacturing locations like India. Complicating this is Apple's corporate strategy, which considers both fan perception and global sales pressures.

Apple is considering raising prices for its next iPhone, the iPhone 17, potentially making it significantly pricier due to anticipated tariffs by the Trump administration. Equity research firm Rosenblatt Securities predicts that the top-end iPhone 16 Pro Max model with 1 TB SSD space, which currently retails at $1,599, might increase to $2,300. The regular iPhone 16 could jump from $800 to about $1,142. Apple's move to potentially offset costs through increased prices comes at a time when the company has reportedly ramped up its U.S. shipments in anticipation of these tariffs. However, Mark Gurman from Bloomberg has suggested that Apple might absorb some of these increased costs internally.

The tariffs, set to be implemented on April 9, specifically target semiconductor manufacturers, which directly impacts Apple's production expenses. Apple, known for its expansive supply chain, manufactures iPhones in China and increasingly in India, wherein production costs differ due to varying tariff levels — 26% in India as opposed to 54% in China. However, shifting production, which involves significant logistical and financial investments, does not provide immediate relief. Discussions are ongoing as to whether Apple plans to adjust more of its production capabilities to India to alleviate these tariff pressures.

In 2017, Apple's iPhone X price strategy had similar price category adjustments for its pro-level phones, causing a ripple of price structuring reaching up to the iPhone 11. Further mentions include a historical overview where the 2017 model iPhone 8 started at $700, continuing to the 2019 iPhone 11, while the iPhone 12 in 2020 started at $800. This legacy of price progressions shows that, barring any external pressures such as tariffs, Apple devices have followed a relatively predictable price adjustment path over time.

Meanwhile, Apple's latest quarterly earnings highlighted a decline in worldwide iPhone sales across several recent smartphone generations. Wall Street's sales expectations were unmet, largely due to slower sales in major markets like China. Raising prices could deter customer upgrades during financially uncertain times, as the company has previously seen.

Apple's corporate strategy leans on technology branding and fan perception, particularly regarding overseas perceptions especially during higher market uncertainties. CEO Tim Cook, who has previously diplomatically managed to exempt Apple's products from earlier tariffs in 2018, remains central to ongoing discussions with the current administration. Ties between Apple and the U.S. administration sensitively hinge on consumer perceptions and legal-political relationships. Notably, Cook’s $1 million donation to President Trump's inauguration secured Apple's favorable positioning in prior negotiations. A shift in policy, or a lack of exemption this time, underpins much of Apple's current strategic reassessment of product pricing and market engagement potential.

Sources: Gizmodo, Reuters, Bloomberg, Rosenblatt Securities

SmartphoneMobileEconomics