The iPhone 16 and other current iPhone models is apparently seeing a huge increase in tariff-based interest and actual purchases, say anonymous Apple Store employees about the impact of new U.S. tariffs on Apple.
Apple Stores are apparently seeing holiday levels of traffic according to the staffers, as reported by Bloomberg, with lots of questions from customers about if prices are about to go up. Apparently there's no company line on what will happen when tariffs come into force, leaving both Apple's employees and customers confused as to what the best move is.
Bloomberg also claims, along with another report from the Wall Street Journal, that Apple is stockpiling current iPhones and and routing Indian-made iPhones to help with short-term needs.
Apple doesn't build as many iPhones in India as it does in China, but India's only subject to a 26% tariff against the current 54% applied against China. While it will provide Apple some immediate relief there aren't nearly enough made in India to meet U.S. demand, even if Apple shipped all of them.
A taxing problem
Apple used to be almost entirely reliant on Chinese manufacturing for its iPhones, but since 2020 the company tried to shift this balance, ordering devices and parts to be assembled in countries like Vietnam and India instead. Unfortunately, these countries have been hit heavily by President Trump's tariffs as well.
As a result these tariffs, Apple is apparently facing a 55% increase on the iPhone's building costs (known formally as the "bill of materials"). Given Apple's usual margin on iPhones (the proportion of a device's cost that makes the company profit) is around 40%, and that iPhone sales make up about half of the company's income, this is a particularly dramatic example of the troubles all companies with global supply chains are currently facing.
Apple is therefore faced with the tough choice of sacrificing its profits, negotiating more favorable deals with its suppliers or frustrating consumers by increasing prices significantly. Even if Apple did respond to the tariffs as Trump hopes, and move manufacturing to the U.S., this would take years to set up, and would likely still result in increased prices.
Trump also applied a tariff to China-produced goods during his first presidency, but Apple was able to secure an exemption for iPhones. But due to the way these new tariffs have been applied through executive power, Apple has limited recourse to fight for a new exemption beyond petitioning the president himself.
If you are trying to buy an iPhone right now, our best iPhones guide will help direct you towards the right model for your budget and needs. But with the entire global economy in flux, we can't advise whether you're better off joining the crowd and getting a new iPhone while the going's good, or hold out in the hope of some series of agreements averting otherwise vicious price increases.
And as for what this means for the iPhone 17 series, expected this September: it's impossible to say right now. Pricing rumors were suggesting some of the models could be getting more expensive, but those claims were made prior to the current tariff regime. While we're not convinced of the claims that the iPhone 17 Pro Max could end up costing over $2,000, we're likely to see a substantial price increase of some kind unless things change.
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