Trump's new threat could jack up iPhone prices even more
Last week we told you how President Donald Trump's tariff scheme (characterized as a work of genius or a harebrained plan randomly conceived and implemented) could jack up the price of your next iPhone. Models of the device assembled in China and shipped to the U.S. will soon face a 54% tariff which is simply an import tax imposed on goods shipped from China to the U.S. There already was a 20% tariff on China that rose with the additional 34% import tax levied against U.S. imports from the country announced by the president last week.
Rosenblatt Securities did some calculations and figured out that with the new tariff imposed on China, the starting price of an iPhone 16 would rise 43% to $1,142 from $799. The most expensive of Apple's smartphones, an iPhone 16 Pro Max with 1TB of storage, would see its price tag surge from $1,599 to $2,300. But we could be in for an even bigger rise in iPhone prices.
This morning, President Trump threatened China with an additional 50% tariff if the country did not pull back the 34% reciprocal tariff it placed on U.S. imports into the country. The reaction on Wall Street was a huge decline in seconds. The 30-stock Dow Industrial Average, already down 500 points at the time, dropped another 300 points in seconds and Apple's shares, which had recovered from their early morning lows, plunged another $8 in seconds.
If Trump follows through on his threat, the 104% tariff on China could send the most expensive iPhone toward the $3,000 mark. Of course, Apple could decide to eat all of the additional tax and keep prices the same, but such a drop in its profit margins could decimate the stock. Apple today opened at $177.24, hit a bottom of $174.62, rebounded to as high as $194.14 and at 2:06 pm EDT is trading at $180.73.
There is one stock that is showing strength today in the wireless industry and that is T-Mobile which has been trading on the positive side for most of the day. As of Monday afternoon, the stock of the country's second-largest wireless carrier is up almost $2.
Trump's plan is to force U.S. trading partners to negotiate trade deals with the U.S. that would remove tariffs from both sides and end what the president sees as unfair trading restrictions on U.S. goods. The question is whether these deals can be reached before the tariffs create economic issues that will lead to a recession or a depression.
For those pointing out that Apple could make iPhones in other countries, Trump's tariffs affect Vietnam, India, and other places where Apple already builds the iPhone and other devices. Even if penguins knew how to assemble iPhones, Trump did impose tariffs on the Heard Island and McDonald Islands which have no human population. These islands are inhabited by a large population of penguins who are notoriously bad assembly line workers.
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