Apple confirms that it will increase the price of its iPhones by 9% as of today due to the tariffs imposed by Trump

According to Bank of America, Apple will have to raise prices by about 9% to offset the impact of the tariffs imposed by President Donald Trump. With the assumption that all of the products will be subject to at least a 10% tariff, the company estimated that the tech giant would have to raise the prices of iPhones, iPads, and other devices by that amount. Wamsi Mohan, an analyst, cautioned that regardless of the company’s response, its earnings may suffer.

Apple will increase the iPhone price to mitigate the tariff increases

As both Main Street and Wall Street rush to forecast the effects of Trump’s expansive plans for import taxes, Wamsi offers his view. The president’s signing of a decree last week that imposed “reciprocal tariffs” on other countries heightened such worries. Apple has been closely watched during the ongoing trade negotiations. Before Trump’s announcement earlier this month of 10% tariffs on China, where Apple assembles the majority of its products, shares plummeted.

As a result of tariffs driving up expenses, Mohan of Bank of America examined scenarios in which Apple either maintains its current pricing in the United States or raises it. He predicted that if Apple doesn’t raise prices, its earnings per share would drop by 26 cents, or 3.1%, in 2026. On the other hand, a 3% price increase would cause earnings per share to fall by 21 cents, or 2.4%, during the same period. This is because, according to the expert, Apple would sell 5% fewer devices if pricing were raised. The tariff hit, however, might be much lower if the increased price tag doesn’t lower sales, according to Mohan.

With this in mind, Mohan said a 9% price raise would be needed to cover the burden of the levy, together with the possible impact on sales volume. Mohan claims that Trump’s proposal for reciprocal tariffs eliminated Apple’s chance to get around some of the taxes imposed on China. According to him, even though the majority of iPhone models can now be produced in India, the reciprocal tax will likely be greater than the 10% charge China currently faces. After years of moving production there, the analyst estimates that 15% of iPhones are now made in India.

Mohan maintained his buy recommendation for Apple despite these calculations, stating that the tariffs appear to be “manageable.” His price prediction of $265 indicates an 8.4% increase over Tuesday’s closing price. In Wednesday’s trading session, shares saw a modest increase, bringing its year-to-date loss to 2.3%. On Wednesday, Apple unveiled the iPhone 16e, a less expensive variant with adequate power to support artificial intelligence.

Donald Trump declares Apple’s significant US investment

Trump disclosed that he just met with Tim Cook, the CEO of Apple, who affirmed that he would be investing heavily in the nation. The tech giant plans to invest “hundreds of billions of dollars” in the US, citing his administration’s tariff policies as the reason for the effort to support the US economy. During their White House conversation, Cook reportedly assured President Donald Trump that Apple will move its production from Mexico to the United States.

Moreover, Trump claimed that many more businesses are intending to increase their investments in the US, using this as evidence of the effectiveness of his tariff strategy without naming any specific companies. Trump has threatened to impose 10% levies on Chinese imports, including semiconductors, automobiles, and medications, and has used tariffs—customs duties on imported items—as a trade weapon. His government contends that the increased expenses will incentivize businesses to shift their manufacturing to the United States. Tariffs, according to critics, can result in higher pricing for consumers.

What impact could President Trump’s tariffs have on Apple’s profitability in the long term?

Tariffs & Tactics: A Conversation wiht Wamsi Mohan, Tech Industry Analyst

Apple and the Tariff Storm

In the wake of president Donald Trump’s tariff announcements, tech giants like Apple are facing headwinds. We sat down with Wamsi Mohan, a distinguished analyst at Bank of America, too discuss the potential impacts and strategies in this shifting landscape.

What’s the potential fallout for Apple with the 10% tariffs on Chinese imports,Wamsi?

wamsi: “The 10% tariff on Chinese imports could considerably impact Apple,as a significant portion of their products are assembled there. Bank of America has modeled two scenarios –- Apple not raising prices or passing on the tariff costs to consumers. In the first case, earnings per share could drop by 26 cents or 3.1% by 2026. If Apple decides to raise prices by 3%, earnings per share drop to 21 cents, or 2.4%, due to a likely 5% decrease in sales volume.

However, if Apple increases prices by 9% to entirely offset the tariff burden, sales remain unaffected.This is a crucial point as it underscores the delicate balance Apple must maintain between pricing and sales volume.”

Could relocating production to India help Apple circumvent these levies?

Wamsi: “Currently, about 15% of iPhones are manufactured in India. While India offers a lower tax regime, President Trump’s reciprocal tariffs could pose challenges. Even if iPhones are assembled in India,they may still attract a higher tariff than the current 10% on Chinese imports,due to the reciprocal nature of Trump’s proposal.”

Despite these challenges, you remain Bullsish on Apple. Why?

Wamsi: “Yes, I maintain a ‘buy’ recommendation for Apple. Though tariffs are a headwind, they seem manageable. Apple’s diverse product portfolio and strong ecosystem provide resilience. Moreover, the company continues to innovate, as seen with the recent launch of the iPhone 16e, a more affordable variant for its expanding markets.”

Trump’s Tariff Strategy: A Sterling Shield or Sword?

President Trump claims his tariff strategy is incentivizing companies to invest more in the U.S.

Wamsi: “While tariffs aim to protect local industries, their effectiveness is debated.They can indeed encourage companies to reshore manufacturing,but they also lead to higher prices for consumers. The net impact depends on various factors, including how businesses adapt and how consumers respond.”

What advice do you have for investors navigating this volatile market?

Wamsi: “In these uncertain times, diversity is key. Spread investments across sectors and geographies. Stay informed about policy developments and their potential impacts on your portfolio.most importantly, maintain a long-term perspective – market fluctuations are normal, and corrections can present opportunities.”