US President Donald Trump's reciprocal tariff has created turmoil all over the world. The stock market of many countries including the US is facing a huge decline. Many countries including Canada, Mexico and the European Union are angry with Trump's tariff. But Trump has called it a bitter pill. When Trump was asked about the turmoil in the global markets after the tariff, he said that I myself do not want the stock market to go through a period of decline but sometimes a bitter pill has to be taken to cure the disease. Notably, one of the goals of Trump's Tariffs is to bring high-tech manufacturing to the U.S. China and the US have come at the loggerheads over the reciprocal tariffs with Trump threatening to raise the tariff to 101%.
One of the many products that come from China is the iPhone. It means, if the US and China lock horns in a tariff war, Apple and iPhone lovers will have to bear most of the losses. As per the Wall Street Journal, which took an example of the iPhone 16 Pro. The cost, for the 256GB version, is $1,100. The cost of all the hardware inside—aka the bill of materials—was about $550 to Apple when the phone was introduced. After assembly and testing, Apple’s cost rises to around $580.
Trump Tariff impact on iPhones
Trump's tariff on China totals 54%. It means the cost of the iPhone 16 Pro will rise to around $850. That profit margin would decrease dramatically if Apple did not raise the price. However, raising the prices of iPhones may result in lower sales and hence loss for the company.
iPhone components cost breakdown with country of origin
- Processor (Taiwan): $90.85
- Display (South Korea): $37.97
- Battery (China): $4.10
- 5G Cellular Modem (U.S.): $26.62
- Memory 8 GB (U.S.): $21.80
- Storage 256GB (Japan): $20.59
- Rear Camera Array: $126.95
- Main Enclosure: $20.79
- All Other Components: $200.06
It is pertinent to mention here that in order to control the prices and profits, Apple is now mulling to send more iPhones to the U.S. from India.