$2,150 for an iPhone? Trump tariffs are ‘category 5 price storm

In a growth that would send shockwaves throughout the technology sector, as well as customers' wallets, new tariffs proposed by former President Donald Trump would push the cost of an iPhone to a whopping $2,150, according to industry insiders. The unpoplar policy proposal, centered on broad tariffs on imports, and especially Chinese imports, has drawn criticism from all quarters, with alarm over a "Category 5 price storm" for US buyers.

Trump, who is running again for president in 2024, has played with imposing a uniform 10% tariff on all importations and a whopping 60% tariff on Chinese imports. These are orders of magnitude larger than the trade war tariffs used in his first term. Experts warn that so brutal a tariff strategy would not only be putting pressure on global supply chains but also increasing the cost of top-selling consumer electronics—chiefly iPhones.

The China Connection

Apple's flagship phone, the iPhone, is largely produced in China, and parts are imported from all over the world. Apple has made efforts to have a diversified supply base, but it still relies heavily on Chinese manufacturing units such as those owned by Foxconn. A 60% tariff would therefore severely impact the cost structure of the company.

“If Apple were to absorb the tariff costs, it would severely impact their profit margins,” says tech analyst Kara Simmons from GlobalTech Research. “But if they pass those costs on to consumers, we’re talking about iPhones that could cost $2,000 or more. It’s not unrealistic to imagine a new iPhone Pro Max crossing the $2,150 mark.”

Ripple Effects

The effects of such a price hike would be felt far beyond the consumers themselves. Apple is a bellwether for the rest of the tech industry, and an abrupt shift in its pricing trend could be a harbinger of an inflationary trend throughout electronics. The other major players—from Samsung and Google to HP and Dell—also have manufacturing outsourced to China, so tariffs would land on a wide array of tech products, from laptops to smartwatches.

Merchants, too, are bracing for a blow. Higher costs likely would dampen consumer demand, particularly in a post-pandemic economy already grappling with inflation. "This kind of policy is inflationary by definition," says economist Linda Marks. "Tariffs are essentially import taxes, and those costs get passed on to the final consumer. In this case, it's your average American who wishes to upgrade their phone."

Political Firestorm

Unsurprisingly, the proposed tariffs have become a flashpoint in the 2024 election debate. Trump argues that the tariffs are necessary to rebalance trade and bring manufacturing back to the United States. “We’ve been ripped off by China for decades,” he said during a recent rally. “Under my plan, we’re going to make sure American jobs come first.”

It is responded by critics that the plan can fail. They look back at the 2018-2019 trade war when American manufacturers and consumers paid more but saw little reshoring of jobs. American households have lost, on average, $1,200 a year under Trump's first term through tariffs, as estimated by the Peterson Institute for International Economics.

"History has already shown us what happens when we start a trade war with China," Senator Elizabeth Warren recently said in an interview. "It's the American consumer who ends up paying the price."

Apple's Dilemma

Apple is in a tight place. While it has begun shifting some production to Vietnam and India, those supply chains are not advanced enough yet to supplant Chinese operations entirely. Analysts say that unless the company quickly and radically changes course, it will be forced to either accept profit loss or shift costs to consumers.

CEO Tim Cook has been quiet-ish on the latest tariff rumblings, though he previously warned protectionism would be bad for the world and bad for innovation. Apple previously sought and received tariff relief in 2019 on some of its products. Whether the firm may again be so treated isn't certain amid the political instability.

The Bottom Line

While the $2,150 iPhone front page scoop may seem like a bombshell, it reflects a very real danger if draconian tariffs become a reality without selective exemptions or supply chain redesign. As America's election campaign heats up, what happens to global trade—and the price of your next iPhone—may well rest on political choices made in the nation's capital.

For now, consumers are left watching and waiting, with one question on their minds: how much are they willing to pay for a pocket-sized supercomputer?