Buying an iPhone could soon cost more than the average monthly salary due to Donald Trump’s tariffs.
A trade war will be very inconvenient for Apple, given that the California-based company manufactures its electronics in China.
Analysts have warned that to cover the increased costs of importing them to the US, the prices may shoot up as high as £2,700.
An iPhone could end up comparably priced to a Vision Pro, Apple’s augmented reality headset which blows people’s minds but has not achieved wide take-up due to its cost.
Dan Ives, senior equity research analyst at Wedbush Securities, told Bloomberg: ‘This is an Economic armageddon if these tariffs come through. From a tech perspective it would take us back potentially a decade, and it would streamroll China ahead.’
He said the current plan of raising taxes on imports would be a good strategy ‘if you wanted to implode Apple’.
Most iPhones are still made in China, which was hit with a 54% tariff.
Although Apple was given exemptions for several products when Trump sought to bring manufacturing back to the US during his first term, there have so far been no indications of a waiver this time.
Mr Ives calculated: ‘It would take three years and $20 billion to take even 10% of the supply chain to the US.
‘If you want $3,500 iPhones, we should build them in New Jersey, we should build them in Texas. If you want $1,000 iPhones we should build them in China.
‘That fundamentally is one of the issues here in terms of the near term pain. You’re burning the house down.’
Another analysis of iPhone cost after tariffs bite was slightly less expensive, but still eye-watering.
According to Rosenblatt Securities, the cost of an iPhone could rise by 43%.
An iPhone 16 Pro Max retails at $1,599 in the US, or £1,199 in the UK. It could cost nearly $2,300 or £1,714 if the same percentage applied.
Apple sells more than 220 million iPhones a year. Its biggest markets include the United States, China and Europe.
What else will go up in price due to the tariffs?
Well… pretty much everything has the potential to increase.
Companies could put up prices across the board to cover the cost of the higher taxes they must pay to the US government.
But it’s also possible that some goods will decrease in price in Europe, as the US becomes less attractive so products are rerouted to countries with less stringent import taxes, and supply increases.
Darren Jones, the Chief Secretary to the Treasury, bluntly told the BBC yesterday that a new age had begun for international trade off the back of the policy.
The era where people have been able to pick up cheap clothes, TVs and cars thanks to globalisation is about to come to a crashing end, he said.
Fast fashion brands such as Shein rely on producing products cheaply in south east Asia, then shipping them to the west. Platforms such as Temu and AliExpress, which have also gained popularity in the UK, have the same model.
Trump announced sweeping tariffs last week in a bid to break US reliance on China, hoping it will encourage more domestic manufacturing.
The UK has so far escaped with the lowest tariffs at just 10%, compared to 20% acros the EU.
But given that China has retaliated with its own tariffs on US imports, the trade war is hotting up and its effects on world trade will be far-reaching.
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