US iPhone prices may rise by 9% as a result of Trump's revenge tax

Any hopes that Apple will once again be sheltered from tariffs have been dashed as President Donald Trump has announced a reciprocal tariff plan. As a result, the company will have to decide between raising the price of the iPhone or suffering a loss.

Trump has already levied a tariff of 10 percent on products imported from China, the country where more than 85 percent of iPhones are manufactured. More recently, last week, Trump announced a plan for reciprocal tariffs on nations that have imposed levies on American exports. This could impact several developing countries, including India, where 15 percent of iPhones are made.

If a tariff of 10 percent is imposed, Apple will have to increase the price of the iPhone, iPad, and other products by 9 percent to neutralize the impact of the new tax, according to Bank of America analyst Wamsi Mohan.

This is a "damn if you do, damn if you don't" situation, with Mohan warning that earnings could be impacted regardless of how Apple responds.

If prices are kept the same, there is projected to be a loss of 26 cents in earnings per share, or 3.1 percent in calendar year 2026. A small increase in prices, such as a 3 percent hike, would still amount to a loss of 2.4 percent, as higher prices have the potential to reduce sales by 5 percent. Of course, the hit could be even smaller if sales are not affected at all in the event of a price increase.

Taking all of that into account, Mohan estimates that a 9 percent increase in price would offset the financial burden of the tariff, including any potential drop-off in demand.

Trump's revenge tariff is different in that it targets the trade barriers adopted by America's trading partners. This means the administration isn't just going after the countries it has a sour relationship with. Instead, it wants to level the playing field. If Apple were hoping to escape the tariffs on China by shifting more production to India, there's not much point in doing that now.