Apple may need to raise prices by 9% to offset tariff impact

Apple may have to increase its product prices by approximately 9 per cent to offset the financial impact of tariffs imposed by US President Donald Trump.

The firm's analysts predict that the tech giant will likely need to hike prices on iPhones, iPads, and other products, assuming they will all be subject to at least a 10 per cent tariff, Caliber.Az reports, citing foreign media.

Wamsi Mohan, an analyst at Bank of America, warned that regardless of how Apple responds to the tariff challenges, the company's earnings could face a significant downturn. His analysis comes as both Wall Street and Main Street scramble to assess the potential consequences of Trump's comprehensive plans for import levies. The concerns surrounding Apple were heightened last week after President Trump signed a memorandum that imposed "reciprocal tariffs" on foreign nations, a move expected to affect Apple's bottom line.

The company's shares saw a decline earlier this month following the announcement of 10 per cent tariffs on China, the country where Apple assembles most of its products. Mohan's review of possible scenarios suggests that if Apple maintains its current prices, it could see a 3.1 per cent drop in earnings per share (EPS), which would result in a loss of 26 cents per share in 2026. On the other hand, a 3 per cent price increase could reduce earnings by 2.4 per cent, equating to a 21-cent per-share drop, assuming the price hike leads to a 5 per cent reduction in device sales. 

However, if the price increase does not significantly impact sales volume, the earnings decline could be less severe. To fully offset the combined impact of the tariffs and reduced sales volume, Mohan concluded that Apple would need to implement a 9 per cent price increase across its products. Trump's reciprocal tariff plan, which was signed into action, has complicated potential workarounds for Apple, including efforts to shift more production to India. Although Apple has increased production in India, the reciprocal tariffs are expected to be higher than the 10 per cent tariff imposed by China, potentially undermining Apple's strategy. 

Currently, around 15 per cent of iPhones are produced in India, but this figure may not be enough to completely bypass the effects of the tariffs. As Apple navigates these challenges, the future of its pricing strategy and its ability to protect profit margins will be closely watched by analysts and investors alike.

Apple Inc. is one of the world’s most influential and innovative technology companies, known for its high-quality consumer electronics, software, and services. Apple initially focused on personal computers, releasing the Apple I and Apple II in its early years. The company revolutionized the tech industry with its Macintosh line of computers in 1984, featuring a user-friendly graphical interface that set the stage for the modern computing era.

Over the years, Apple expanded its product offerings and became a pioneer in mobile technology. The introduction of the iPod in 2001 transformed the music industry, and in 2007, the company revolutionized the mobile phone market with the release of the iPhone. The iPhone’s groundbreaking design, coupled with its App Store ecosystem, changed the way people interact with technology, giving rise to the modern smartphone industry.

Apple also made significant strides in the wearable tech space, introducing the Apple Watch in 2015, which became the most popular smartwatch globally. The company’s entry into the services sector, with offerings like Apple Music, iCloud, and the App Store, helped diversify its revenue stream beyond hardware sales.

Today, Apple is one of the most valuable companies in the world, boasting a market capitalization that frequently exceeds $2 trillion. 

By Naila Huseynova