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On September 26, 2024, consumers in Srinagar, Jammu and Kashmir, explored the newly released iPhone 16 series at the Master Arts Shop, specifically the iPhone 16 Plus and iPhone 16 Pro Max.
There are serious implications for Apple following President Trump’s recently announced reciprocal tariffs, which could result in a potential price surge for the iPhone 16 Pro Max by as much as $350 in the U.S., as estimated by analysts at UBS on Monday.
The iPhone 16 Pro Max currently retails at $1,199, and UBS forecasts that the retail price could spike nearly 30% for units produced in China. In contrast, they project a more modest $120 increase for the iPhone 16 Pro, priced at $999, should it be manufactured in India.
These developments have had a significant impact on Apple’s stock value, which has seen a decline of 20% over the past three trading days, leading to a staggering loss of over $675 billion in market capitalization. This downturn is driven by growing concerns that the new tariffs will compel Apple to raise prices at a time when consumer purchasing power is dwindling.
UBS analyst Sundeep Gantori highlighted the uncertainty surrounding how the increased costs will be managed with suppliers and the extent to which these costs can be transferred to consumers, as well as the duration of the tariffs in effect.
As a company that heavily relies on Chinese manufacturing, Apple is particularly vulnerable to the ramifications of an ongoing trade war. China’s potential new tariff rate could reach 54%—a figure that was further exacerbated with the introduction of additional increases on Monday. Secondary production locations such as India, Vietnam, and Thailand have also faced smaller tariff impositions.
Last week, analysts from JPMorgan Chase suggested that Apple might implement a global price increase of about 6% as a response to U.S. tariffs, while Barclays analyst Tim Long warned of the possibility that Apple might have to increase prices significantly or risk a 15% decline in earnings per share.
Considerations have also been made regarding the possibility of relocating iPhone manufacturing to the United States, although many supply chain experts regard this as an impractical option. Wedbush analyst Dan Ives estimated that such a move could push the cost of an iPhone to an astounding $3,500.
Analysts from Morgan Stanley noted last Friday that Apple could potentially absorb additional tariff costs amounting to roughly $34 billion each year. They also pointed out that while Apple has diversified its production strategies, termed “friend shoring,” these alternate countries may also face tariffs, thereby constraining Apple’s options.
In light of last week’s tariff announcement, Morgan Stanley observed that there is diminishing differentiation between manufacturing in China and friend shoring—if a product is not produced in the U.S., it will likely incur substantial import tariffs.
Last week, the firm previously assessed that Apple might increase prices across its U.S. product lines by 17% to 18%. However, there remains a possibility for Apple to seek exemptions for certain products from the U.S. government.
WATCH: Apple plummets on Trump tariffs
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