In response to the tariffs imposed by the Trump administration, Apple Inc. (NASDAQ:AAPL) might have to raise iPhone prices by 9%, said analysts at the Bank of America.
What Happened: Bank of America analyst Analyst Wamsi Mohan suggests that the tech titan may need to revise its pricing strategy to compensate for the costs related to the tariffs, reported CNBC on Wednesday. BofA stated that the iPhone maker will need to hike prices on iPhones, iPads, and other products by approximately 9% to counter the effect of tariffs. assuming a minimum 10% tariff applies to all of them. Mohan also expects a potential hit on the sales volume of iPhones.
The analysis considered scenarios in which Apple either maintains its current pricing in the U.S. or raises prices due to increased costs from tariffs. If Apple chooses not to raise prices, earnings per share would decline by $0.26, or 3.1%, in the 2026 calendar year.
On the other hand, a price increase of approximately 3% would lead to a 21-cent drop in earnings per share, representing a 2.4% decline during the same period. This projection assumes that higher prices would reduce device sales by 5%. However, if sales remain unaffected despite the price hike, the impact of tariffs could be even smaller.
Based on these calculations, Analyst Wamsi Mohan cautioned that the company’s earnings may be impacted regardless of its response.
Why It Matters: This potential price hike comes in the wake of President Donald Trump‘s plans to impose tariffs on imported goods from several countries, including China. In a poll conducted by Benzinga, 35% of the respondents believed that Apple would see maximum impact from Trump’s tariffs due to its reliance on Chinese supply chains. Most respondents also feel that these plans could provoke retaliation from other nations.
Furthermore, Trump’s plan for reciprocal tariffs on India is likely to hamper Apple’s plan to avoid the tariff levies. Although most iPhone models can now be produced in India, the reciprocal tax could exceed the 10% fee imposed on China.
On Feb 19, Apple announced the iPhone 16e, a budget-friendly offering replacing the third-generation iPhone SE. The iPhone 16e, priced at $599, is said to be capable of running artificial intelligence efficiently.
Meanwhile, Analyst Wamsi Mohan maintained his Buy rating on Apple with a $265 price target, indicating an 8.22% upside from Wednesday’s close.
Image via Shutterstock
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
