Apple is in trouble after new taxes called tariffs, set by former President Donald Trump, could cost the company $33 billion every year. Experts at Morgan Stanley, a big investment bank, say Apple cannot avoid most of these costs. This means iPhones, iPads, and MacBooks might get more expensive soon.
How Trump’s Tariffs Hurt Apple’s Factories Worldwide
The new tariffs are taxes on products made in other countries. Factories in China, where Apple makes most iPhones, now face a 54% tax. Factories in Vietnam, Thailand, and India also have new taxes between 26% and 46%. Since Apple builds nearly all its devices in these countries, the company must pay these extra costs.
Apple tried to make some iPhones early to avoid the taxes. However, the company usually makes products only when needed, so it cannot stockpile enough devices. Even the new iPhone 17, which is still being designed, cannot help because it is too early to produce.
Apple’s US Factories Will Not Save Money
Apple recently promised to spend $500 billion on US factories. However, experts say this is mostly old plans renamed to sound new. Right now, less than 10% of the investment seems to be actually going towards developing US factories. Experts estimate that a U.S.-built iPhone could cost around $3,500 instead of $799 because American workers and materials are more expensive.
Why iPhones Will Cost More
Morgan Stanley says Apple has two choices. It can pay the $33 billion itself, which would hurt profits or raise prices for customers. Experts think Apple will increase prices by 10% to 15%. This means:
- The basic iPhone 16 could cost $879 instead of $799.
- The high-end iPhone 17 Pro might cost over $2,300.
If Apple raises prices too much, fewer people will buy iPhones. But if it does not, the company could lose billions.
Why Apple’s Stock Price is Dropping Fast
Apple’s stock price has already fallen from 225 to below 200. Morgan Stanley warns it could drop to 172. This is because investors are worried about lower profits and fewer iPhone sales. The $33 billion loss is equal to a 26% drop in Apple’s yearly earnings.
Apple Cannot Get Help from Trump This Time
In the past, Apple got special permission to avoid some tariffs. This time, Trump’s team used a strict law called the International Emergency Economic Powers Act. This law makes it almost impossible for Apple to ask for help. Trump has said he will not give any company exemption except for a few raw materials.
Congress could step in, but experts say Republicans support Trump’s tariffs. This leaves Apple with no way out.
A Global Problem for Apple
Apple tried to move some factories from China to India and Vietnam to avoid taxes. But now, those countries also have high tariffs. This leaves Apple stuck. It would require multiple years plus billions of dollars for the company to relocate between nations. Customers should expect their iPhone prices to increase due to this situation. The reduced funds from the tariffs force Apple to allocate fewer financial resources to innovations, including AI developments and camera improvements.
What This Means for Everyday People
If you want to buy a new iPhone, you may need to pay more very soon. Small price hikes could start with the iPhone 16 this fall. Over time, Apple might cut back on discounts or free repairs to save money.
The imposed tariffs created obstacles for Apple to conduct successful innovation projects. The reduction of $33 billion annually might force Apple to postpone important features as well as new product development. The current trade war has the potential to create delays throughout the tech industry, in which Apple typically plays the role of pioneer. Everyday, technology experiences tangible effects because of political interference in the market. The expert explained that the issues faced by Apple currently affect every person across the globe.