Apple warns iPhones may get more expensive due to trade war

iPhone X Box

Apple is a trillion-dollar company now, but its future is a bit uncertain thanks to the ongoing trade war between the US and China. The two countries are imposing tariffs on each other and the iPhone might get caught in the crossfire, becoming more expensive in the process.

Apple itself has warned that this could happen in a regulatory filing with the US Securities and Exchange Commission, as reported by Bloomberg. It believes that tariffs could raise the cost of its products. Even the components and raw materials used to make its devices like aluminum and steel could get pricier.

iPhone Price Hike

The filing then delves into potential scenarios which might come about because of these increased costs. One is that it’ll adversely impact the gross margin which Apple earns on sales. The second is that it’ll make the products more expensive for customers.

The latter situation may just result in making the devices less competitive and reduce consumer demand. We’ve already seen a version of this happening in India when the government decided to hike import tax and custom duties. Apple chose to increase prices rather than absorb the difference, making the already-expensive iPhone even more costly.

Apple also delves into the political fallout of this trade war. China could adopt protectionist measures to limit its ability to offer products and services. All this political uncertainty could also have a negative impact on consumer confidence and spending.

Also Read: Dual-SIM iPhone 9 might be limited to China

China and Apple already have an uneasy relationship at the moment since the country favors home-grown companies over foreign brands. For now, CEO Tim Cook says that the tariffs which have been announced so far haven’t directly impacted its goods.

This isn’t strictly true since there is one product affected by all this – the original Apple Watch. The smartwatch ended up on a list of products which could face a 10% tariff in the future. However, the first-gen device isn’t even sold in the US anymore so the hike may not affect Apple’s bottom line.