Apple might find itself in a position where it needs to bump up product prices by about 9% to cushion the impact of the tariffs introduced by former President Donald Trump. This estimation comes from Bank of America’s analysis, which suggests that if iPhones, iPads, and other devices are tangled up in a 10% tariff, this price increase could be essential. Wamsi Mohan, one of their leading analysts, pointed out that Apple’s earnings might feel the pinch regardless of its pricing strategy, a concern that’s got both Wall Street and everyday folks on edge as they try to forecast the aftershocks of Trump’s tariff policy.
The apprehension surrounding this issue grew when Trump signed an order for “reciprocal tariffs” targeting imports from overseas. Consequently, Apple has found itself under heightened scrutiny during these ongoing tariff talks. Earlier in the month, Apple’s stock took a hit following Trump’s announcement of a 10% tariff on China, a key manufacturing hub for the company.
Mohan broke down different scenarios: one where Apple keeps U.S. prices steady, and another where it adjusts them due to rising costs from tariffs. Should Apple hold off on a price raise, it may face a 26-cent dip in earnings per share (EPS), or a 3.1% drop by 2026. If prices see a modest 3% bump, the EPS impact would lessen to a 21-cent decline or a 2.4% reduction. This prediction hinges on the assumption that higher prices could lead to a 5% drop in sales volumes. Yet, Mohan noted that if sales don’t slump, the financial hit from tariffs could be less harsh.
Given these factors, Mohan suggested that a 9% price increase could balance out the tariff cost and any associated sales volume decline. Trump’s reciprocal tariff strategy threw a wrench in Apple’s potential tactics to dodge certain Chinese tariffs. Although a portion of Apple’s iPhone production is now in India—around 15% after a gradual shift—India’s reciprocal tariff rates might outstrip China’s 10% levy.
Despite laying out these potential outcomes, Mohan maintains a “buy” rating for Apple, perceiving the situation as “manageable” for the tech giant. He set a price target of $265, reflecting an 8.4% increase over Tuesday’s market close. As of Wednesday, Apple’s stock showed a slight upward tick, though its year-to-date performance recorded a 2.3% decline. In the midst of these developments, Apple unveiled a budget-friendly iPhone 16e, geared for the demands of artificial intelligence.
