Apple Will Be Raising iPhone Prices For Fall Model, Won't Blame Tariffs

Apple will almost certainly have to raise prices on the iPhone models to be introduced this coming fall due to the impact of tariffs - at least $900 million this year and more in the future - but it will never admit that publicly. 

Attempts to scale manufacturing in India are just beginning, suppliers have been squeezed as far as possible and making iPhones in the US are an uncertain project for years in the future. As a result, the cost of iPhones, especially the most popular and expensive models, will have to rise. JL

Rolfe Winkler and Yang Jie report in the Wall Street Journal:

Apple is weighing price increases for its fall iPhone lineup (but) is determined to avoid appearing to attribute price increases to U.S. tariffs on goods from China, where most Apple devices are assembled. A 20% tariff imposed on Chinese goods remains in place and covers smartphones. For Apple’s most profitable, high-end phones, the Pro and Pro Max models, China will continue to handle the bulk of production. India’s infrastructure and technical capabilities aren’t yet sufficient to support mass production at the scale China can deliver. Apple would have trouble making up for China tariff costs solely by seeking further savings from its suppliers, meaning that a hit to its profit margin was likely unless it could raise prices. Tariff would lead to $900 million in costs in this quarter, and more after that

Apple is weighing price increases for its fall iPhone lineup, a step it is seeking to couple with new features and design changes, according to people familiar with the matter.

The company is determined to avoid any scenario in which it appears to attribute price increases to U.S. tariffs on goods from China, where most Apple devices are assembled, the people said.

The U.S. and China agreed Monday to suspend most of the tariffs they had imposed on each other in a tit-for-tat trade war. But a 20% tariff that President Trump imposed early in his second term on Chinese goods, citing what he said was Beijing’s role in the fentanyl trade, remains in place and covers smartphones.

Trump had exempted smartphones and some other electronics products from a separate “reciprocal” tariff on Chinese goods, which will temporarily fall to 10% from 125% under Monday’s trade deal. 

New iPhones set to be released in the fall include some design and format changes, including an ultrathin design, The Wall Street Journal has reported. 

Chief Executive Tim Cook has been facing pressure over the U.S.-China trade conflict, which threatens Apple’s supply chain. In response, he built up inventory in March before tariffs were announced and shifted manufacturing for the U.S. market to India. He said earlier this month that a majority of iPhones shipped to the U.S. in the April-to-June quarter would come from India. For Apple’s most profitable, high-end phones, such as the Pro and Pro Max models, Chinese factories will continue to handle the bulk of production, people familiar with Apple’s supply chain said. While Indian factories are capable of producing Pro models, India’s infrastructure and technical capabilities aren’t yet sufficient to support mass production at the scale China can currently deliver, they said. The models use better camera systems and larger batteries.

The investment bank Jefferies estimates that of the approximately 65 million iPhones Apple sold in the U.S. last year, around 36 to 39 million were Pro or Pro Max models.

The people familiar with the supply chain said Apple would have trouble making up for China tariff costs solely by seeking further savings from its suppliers, meaning that a hit to its profit margin was likely unless it could raise prices. At the same time, company executives are wary of blaming increases on tariffs. When a news report in April said Amazon might show the impact of tariffs to its shoppers, the White House called it a hostile act and Amazon quickly said the idea “was never approved and is not going to happen.”

 

These circumstances have led Apple to look at what supply-chain insiders described as the least-bad choice: raising prices on the new iPhones to preserve profit and finding reasons other than tariffs to explain the move. It couldn’t be determined what new features Apple may offer to help justify price increases.

Apple traditionally rolls out new models of its iPhones in the fall. If it follows convention, this fall’s models will be known as the iPhone 17 lineup. Current iPhone models range from the base model iPhone 16, which starts at $799, to the iPhone 16 Pro Max, which costs $1,199 and up.  

This fall’s lineup is expected to include a thinner model that would stand in the place of the current iPhone 16 Plus, which retails for $899 in the U.S.

Cook said the company expected current tariff policies would lead to $900 million in additional costs in this quarter, and more after that. Apple is studying how it could move some iPhone production to the U.S., but doing so will likely take years, the Journal has reported.

People involved in supply-chain planning said it was prudent to assume that tariffs on Chinese goods, including smartphones, would ultimately be higher than those on goods from India and Vietnam, the other two main countries where Apple products are assembled. That is why Apple’s transition to Indian production for smartphones exported to the U.S. is likely to accelerate.

India accounted for around 13% to 14% of global iPhone shipments last year and the number is expected to double this year. That still wouldn’t be enough to meet the demand for U.S. and India, according to Abhilash Kumar, an analyst with tech research firm TechInsights.

“By the end of 2026 or the beginning of 2027, we are optimistic that India will be capable of meeting both the U.S. and India’s demand, but China will still be important” for sourcing components, he said. 

Other analysts are more cautious. Jefferies analysts said it would be a “tall order” for Apple to increase production of high-end iPhone models in India to around 40 million units within two years, including those intended for sale in India.