The Blubber

Apple May Face Tariffs Under Trump Administration, Potential iPhone Price Hike Looms

Apple Inc. (NASDAQ: AAPL) could soon be hit with tariffs under a second Trump administration, forcing the company to raise the price of iPhones and other products in the U.S., according to BofA analyst Wamsi Mohan.

Wall Street Hopes for Another Exemption

Investors have been hoping that Apple would receive another tariff exemption, similar to what it got during Trump’s first term. However, many analysts predict that tariffs will ultimately lead to higher consumer electronics prices across the board.

Apple’s Tariff Exposure Under Review

In a note to clients on Wednesday, Mohan revisited Apple's tariff scenario following President Trump’s memorandum ordering reciprocal tariffs with U.S. trading partners.

"As such, we are revisiting our tariff scenario for Apple, assuming all products will face at least a 10% tariff," Mohan wrote.

While the 10% figure applies specifically to China, he warned that reciprocal tariffs on other countries, such as India, could complicate Apple’s supply chain.

Apple has been expanding iPhone production in India to reduce reliance on China, but Mohan noted that the company may still have to source U.S. iPhone demand from China if tariffs make Indian-made iPhones too costly.

The tariffs wouldn’t take effect until at least April 2, he added.

Price Increases May Be Necessary

Mohan believes Apple may have no choice but to raise prices on all U.S.-sold products to offset tariff costs.

"We estimate that Apple sells 50 million iPhones, 15 million iPads, and 10 million Macs in the U.S. per year," he wrote.

Assuming that 100% of these devices are subject to a 10% tariff, the impact could be significant:

• If Apple absorbs the cost instead of passing it to consumers, earnings per share (EPS) could drop by $0.26 in calendar 2026.
• If Apple raises U.S. prices by 3%, the EPS impact would be reduced to $0.21 (a 2.4% decline), with an assumption that 5% fewer units are sold.
• If demand remains inelastic, the financial impact could be even smaller.
• Apple would need to raise prices by 9% to fully offset the impact of 10% tariffs, assuming a 5% drop in sales volume.

Apple’s Stock Outlook

Despite the tariff concerns, Mohan left his fiscal 2025 earnings estimates unchanged and maintained his $265 price target for Apple.