Tariffs Threaten Apple's $999 iPhone Price Point in the U.S. [Gurman]

Apple could finally be forced to make price increases to iPhones in the United States due to recently announced tariffs; however, the company does have multiple ways to cope with changing trade realities, according to a new report from Mark Gurman. In a newsletter to subscribers, Gurman outlines how these tariffs, set to take effect by April 9, could impact Apple's pricing strategy and supply chain decisions.

Since the iPhone X debuted in 2017 at $999, Apple has kept the starting price of its flagship model steady in the U.S. Storage upgrades have edged costs up slightly, and in 2023, the iPhone 15 Pro Max saw a $100 increase by eliminating its lowest-capacity option. The new tariffs, targeting Apple's main production countries, could push the company to reconsider this approach.

The tariffs hit multiple regions where Apple has shifted its manufacturing. India, a growing base for iPhone and AirPods production, faces a 26% levy. Vietnam, producing AirPods, iPads, Apple Watches, and Macs, is looking at a 46% tariff. Malaysia and Thailand, both tied to Mac production, will see 24% and 37% levies, respectively. Ireland, where some iMacs are assembled, gets a 20% tariff, while China's rate climbs to 54% with an additional 34% increase. This wide reach reduces the advantage Apple sought by diversifying from China.


Apple has options to respond. The company has been stockpiling inventory in the U.S. for months, meaning units already stateside avoid the tariffs. This might delay price changes until the next iPhone launch in September. Procurement teams are likely pressing suppliers for better rates to safeguard profit margins. With a hardware margin around 45%, Apple could absorb some costs too, or explore further supply chain adjustments, though a full U.S. manufacturing shift remains unlikely.

Historically, Apple has handled trade hurdles. During Donald Trump's first term, CEO Tim Cook secured an iPhone tariff exemption. After COVID-19 highlighted risks of centralized production, the company sped up diversification. Yet, with these tariffs striking nearly all its manufacturing bases, the challenge is greater now. Cook may pursue exemptions again, but success isn't guaranteed.

The $999 price point matters to consumers, many of whom use installment plans or trade-ins, softening the impact of list prices. Still, a noticeable increase could draw pushback. Apple has adjusted prices elsewhere—Japan in 2022 due to a weakening yen, and Europe and the U.K. that year amid inflation—showing it's willing to adapt when necessary. For now, the company is evaluating its next steps as the tariff deadline approaches.