There have been escalating fears in recent days for iPhones to rise in price as a result of the huge tariffs imposed by President Trump on China. Most of Apple’s smartphones are manufactured in China, and some analysts have speculated that the extra taxes could push prices up by more than 40 percent – which has led to some panic purchases. But a new report gives hope that this may not happen.
A new investor note of analysts at Morgan Stanley (seen by Appleinsider) proposes a number of measures where Apple could weather the effects of customs without raising prices and while remaining profitable. As suggested elsewhere, Apple could increase production in India, producing 30 to 40 million iPhones a year and faces far lower tariffs than China. Morgan Stanley then suggests that Apple could push customers against the more expensive models with more storage, which have a higher profit margin and is thus better equipped to absorb the effects of customs.
None of these are easy solutions and both are strategies that Apple has already tried. It would be more a matter of speeding up existing plans rather than starting brand new. Apple has been working on diversifying its supply chain for some time, partly in the light of human rights, which is concerned about Chinese factories, but to do so is a slow process. (It also makes a couple of iPhones in Brazil to meet local demand; sources suggest that it can also rise.)
On the storage sales page, Apple did something similar in 2023 when it launched the iPhone 15 Pro Max at an entry-level price of $ 1,199 with 256 GB of storage compared to the iPhone 14 Pro Max starts at $ 1,099 with 128 GB. Thus, it was the “same price” gigabyte for gigabytes, while demanding that customers use more as a minimum, which increased iPhone’s average sales price. It’s a victory for Apple – especially since storage margins are much higher than the handset margins.
Whether Apple would raise minimum storage distributions or simply focus its marketing on pushing customers against 512 GB and 1 TB configurations is uncertain at this time. Morgan Stanley also recognizes another option that involves raising prices, but would make this more tasty for customers by introducing long-term financing options and talking up to carrier deals on the iPhone 17 launch event.
Of course, these are not the only strategies. Apple could just take the short -term hit to his profits or appeal to the president about an exemption. If you would like to read more about the company’s options, look at how Apple can handle Trump’s tariffs.