It’s been reported that fears of Trump-era tariffs hitting Chinese imports have sparked a wave of iPhone upgrades, with Apple hoping to offset price pressures by ramping up production in India.

However, in a recent update (changing daily it seems!) the Trump administration has exempted smartphones and computers from the recently imposed tariffs, including the 10% global tariff and the 125% tariff on China. This exemption also extends to other electronics like memory cards, solar cells, and semiconductors.

iPhone Sales Surge as Tariff Panic Takes Hold

Just a short time after President Donald Trump announced sweeping new tariffs on Chinese imports, it seems Apple stores across the US have been reporting a noticeable spike in iPhone upgrades. The catalyst has been the concern that the cost of new devices could soon rise sharply if Apple’s supply chain takes a direct hit.

For example, retail staff in several major cities have reported that shoppers appear to be acting pre-emptively, prompted by growing speculation that this latest wave of tariffs could disrupt pricing sooner than expected.

Warning

Although Apple hasn’t announced any official price changes, analysts have warned that production costs for devices like the iPhone 16 Pro could jump by over $250 if Chinese-made components are hit with the full weight of Trump’s tariff package. For buyers, the risk isn’t just higher prices, but it’s also the possibility of deals and trade-in incentives vanishing overnight.

As Dan Ives, Managing Director at Wedbush Securities points out: “If Apple passes on the full tariff burden, we’re looking at iPhones retailing for over $2,000,” adding “That kind of pricing would be a major shock to the system—especially in the US market.”

What’s Actually Happening With The Tariffs?

At the time of writing this article (11.04.25), President Donald Trump announced a sweeping set of tariffs targeting Chinese-made goods as part of what he’s dubbed an economic “Liberation Day.” Under this new regime, levies on certain imports have reportedly surged to a cumulative 145 per cent, with electronics, including smartphones, firmly in the firing line.

For Apple, the timing couldn’t be worse. For example, around 90 per cent of iPhones are still assembled in China, and the prospect of such sharp increases in import costs has sent alarm bells ringing. Analysts now estimate that tariffs alone could push the production cost of a high-end iPhone 16 Pro Max from $1,199 to over $2,100 if passed on to consumers. Also, if Apple were ever forced to shift final assembly to the US, the price could skyrocket to as much as $3,500 per device, an outcome most observers still see as unrealistic but not entirely off the table.

While Trump has pointed to Apple’s $500 billion investment pledge as proof that iPhone manufacturing could be repatriated, the fine print appears to tell a different story. For example, most of that spending is expected to go toward R&D and AI infrastructure, not assembly lines. As things stand, it’s been reported that Apple’s short-term solution was to ramp up production in India and fly devices to the US by charter jet! That sounds like an expensive (and not very environmentally friendly) workaround, but one that avoids the full impact of the China tariffs for now.

Behind the scenes, Apple is also said to be lobbying for an exemption, similar to the one it secured during Trump’s first administration. However, with no guarantee of success and political rhetoric heating up, the company may have little choice but to start factoring the cost of tariffs into its consumer pricing, if not now, then very soon.

Why It’s Hitting Apple So Hard

Quite simply, no other tech company is as exposed to this tariff storm as Apple. The iPhone accounts for roughly half of the firm’s total revenue, and its China-based supply chain (centred around Foxconn’s vast factories) has long been central to its global dominance.

That exposure has seriously spooked investors. For example, Apple’s shares fell 19 per cent over just three days last week, marking the worst such dip for the company in nearly 25 years! The combination of supply chain vulnerability, investor nervousness and potential consumer backlash has sent shockwaves through both Silicon Valley and Wall Street.

What’s Apple Doing About It?

Apple hasn’t made any official comment on the situation at this point, but sources close to the company suggest it is already taking steps to reduce its reliance on Chinese manufacturing, most notably by perhaps ramping up production in India.

In fact, the Wall Street Journal recently reported that Apple plans to redirect a significant share of its India-assembled iPhones to the US market as a short-term fix. Although India faces a 26 per cent tariff under Trump’s new policy, that’s still roughly half that imposed on Chinese goods, thereby making it seem to be a more viable alternative.

Building In India

Thankfully for Apple, it has been building up its Indian manufacturing base since 2017, initially focusing on older models and gradually moving towards assembling newer ones like the iPhone 15 and 16. In fact, Bank of America estimates Apple could make around 25 million iPhones in India this year, enough to supply about 50 per cent of US demand if redirected accordingly!

That said, even the India solution looks like it may have its limits. For example, Vietnam, another key site for Apple products like AirPods and Apple Watches, was slapped with an eye-watering 46 per cent tariff under the new plan. Also, moving large-scale production out of China entirely remains logistically (and financially) daunting.

The situation has led some analysts to joke that if consumers want a $3,500 iPhone, they may as well be made in the US, e.g. New Jersey or Texas.

What This Means for Apple’s Business Model

The tariff crisis presents Apple with a tough choice, i.e. absorb the extra costs and watch its profit margins shrink, or pass them on to consumers and risk a backlash.

Analysts say even a 30 per cent increase in iPhone prices could dent demand significantly, especially in mature markets where upgrades are already slowing. For Apple, which prides itself on premium pricing and tight margins, the threat to its bottom line is very real.

Also, there’s the question of investor confidence. The recent stock slide may only be the beginning if fears grow that Apple can’t adapt its supply chain fast enough to avoid future trade tensions. While the company has pledged to invest $500 billion in US manufacturing over the next four years, analysts remain sceptical about how much of that will directly impact iPhone production.

As Neil Shah, Vice President of Research at Counterpoint says: “There’s no easy way out,” and “Even moving 10 per cent of Apple’s supply chain out of China could take years and cost tens of billions. This is going to test Apple’s entire global strategy.”

What About Business Customers and Competitors?

For Apple’s business clients, ranging from SMEs to global enterprises, rising device costs could become a major headache. Many companies operate under bulk hardware contracts, and an across-the-board rise in iPhone prices could hit IT budgets hard. Many business owners also fear losing some of the attractive offers and deals they’ve been used to in better times.

Meanwhile, Apple’s competitors are watching closely. For example, Samsung and Google, both of which produce more of their hardware outside of China, may find themselves in a stronger position if Apple is forced to hike prices. Devices that were once considered too costly or too niche may suddenly look more attractive to price-sensitive consumers and businesses alike.

Even if Apple manages to dodge the worst of the tariff fallout, the current frenzy may have already exposed a key vulnerability in its strategy, i.e. an over-reliance on a region now sitting at the centre of a deepening geopolitical divide. The next few months could redefine where and how Apple makes its most iconic product, and at what price.

What Does This Mean For Your Business?

Whether or not iPhone prices spike in the coming weeks, the sudden rush to upgrade tells us one thing i.e., consumer and investor confidence in global supply chains is far more fragile than it once seemed. For Apple, this tariff-driven panic has highlighted just how exposed it remains to international political swings, despite years of effort to diversify its manufacturing base.

For now, Apple’s (reported) strategy of flying in India-made iPhones to dodge China-focused tariffs might offer a temporary cushion. However, the scale and speed of Trump’s latest trade measures suggest that piecemeal solutions may no longer be enough. If production costs continue to rise, Apple may have little choice but to rethink both where it builds its devices and how it prices them, especially in core markets like the US, where consumer resistance to steep price hikes could quickly translate into lost sales.

For UK businesses, particularly those that issue iPhones through corporate mobile contracts or manage large device fleets, any upward shift in pricing could, of course, create budgetary pressure. Procurement cycles may, therefore, need to shorten, upgrade plans may be re-evaluated, and conversations around alternative suppliers could gain ground. With the whole tariff situation, supply chain disruption and global pricing volatility inevitably spill over, especially when the product in question is as globally embedded as the iPhone.

Meanwhile, rivals like Samsung and Google may be able to gain a little ground, though not without their own challenges. Samsung, for example, relies heavily on production in Vietnam, which has also been hit with a 46 per cent tariff under Trump’s new plan. Even so, with a more diversified supply chain and broader pricing range, these competitors may still appeal to businesses and consumers looking for more flexible or less exposed alternatives.

Apple, for all its brand loyalty, is facing a moment of reckoning, not just on pricing, but on the sustainability and resilience of its entire business model. What began as a tariff story may, therefore, trigger a much deeper shift in the balance of power across the global tech landscape.