This morning, Bloomberg reported that tech imports would be excluded from the Trump administrations 125% “reciprocal” China tariff. To be specific, this includes “smartphones, laptop computers, hard drives and computer processors and memory chips.” In short, Apple doesn’t really have something to worry about anymore – at least for now. The initial 20% tariff for the “fentanyl crisis” is still in place, however.
While we are safe from imminent price hikes for now, an additional 125% tariff on China would’ve been extremely damaging. Here’s a quick overview bullet we just dodged.
Tariff overview
Tariffs are applied on top of the declared value at the time of import. This means that tariffs would hurt Apple’s margins, but it doesn’t necessarily guarantee price hikes – at least in low increments.
For example, an iPhone 16 Pro 256GB costs Apple $580 in parts, assembly, and testing. With the initial 20% China tariff, that would mean that the effective cost would be $696. While Apple certainly wouldn’t want their margins to be hurt, it would still be viable for the phone to be sold at the current $1099 price point.
However, with a 145% tariff (or even the initial 54% reciprocal tariff) – price hikes would’ve been inevitable:
As a reminder, the iPhone 16 Pro 256GB is currently sold at $1099. Apple isn’t in the business of selling products at low profit margins, so there inevitably would’ve been a multi-hundred dollar price hike with any of these more extreme tariffs.
Theoretical prices with tariffs baked in
Some Apple products, like AirPods and Apple Watch, are already widely manufactured in Vietnam, where a 90-day tariff pause was authorized. Many countries are attempting to work out trade deals, so ideally there’d be a zero tariff situation there. Some newer Macs are manufactured in Vietnam as well.
However, Apple is still heavily reliant on China, so it’s still worth highlighting what we could’ve had if nothing had changed.
For another example, let’s use the M2 MacBook Air. According to TechInsights, the bill of materials for an M2 MacBook Air is roughly $506, for both hardware and assembly. Obviously, that’s now 2 generations behind, but it serves as a decent point of reference since the MacBook Air is still largely the same.
With 145% added on top of that, you’re looking at $1239 before margins for a 13-inch MacBook Air with 256GB of storage.
For a last example, we’ll take the 2021 12.9-inch iPad Pro. According to Nikkei Asia, that has a parts cost of roughly $510. With a 145% tariff, the pre-margin parts cost could’ve been as high as $1250. That’s far in excess of the $1099 retail price that it started at.
Granted, that last one was just for the sake of example, as Apple has since redesigned the iPad Pro.
Wrap up
It goes without saying – a 145% total tariff on imports from China simply wasn’t viable for the pricing of new tech products. These are very much so rough estimates, but it illustrates how bad things could’ve potentially become.
So, at least for now, we can enjoy current Apple product prices. For at least a couple weeks, this will be the end of speculating on the possibility of imminent Apple product price increases.
In case the pricing uncertainty has you frightened, and you’re interested in some of the best Apple product deals right now, here they are:
Given how frantic everything with the Trump administration and tariffs has been, I wouldn’t hold my breath on this news lasting forever.
My favorite Apple accessories on Amazon:
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