Consumers are still reeling over the latest price increases from Apple. Not long ago, the average selling price (ASP) of the iPhone was in line with the base model of the newest offering, around $649. Today, it is approaching $800. It is actually higher than the base model of the entry-level new iPhone.
iPhone is not the only Apple product experiencing price increases as it seems to be across the line from Apple Watch to iPad to Mac mini to MacBook and other laptops to accessories such as the Apple Pencil. Every updated product is more expensive than what it replaced. Some suggest that the price is affecting Apple’s ability to grow.
On top of all that, President Trump is threatening a 10 percent tariff on iPhones and laptops produced in China as a part of the looming trade war. According to AppleInsider, “Trump says US could place 10 percent tariff on iPhones and laptops imported from China.”
“Trump confirmed his administration is thinking about lumping iPhone and laptop computers into the next round of tariffs.
“‘Maybe. Maybe. Depends on what the rate is,’ he said in reference to duties on phones and computers. ‘I mean, I can make it 10 percent, and people could stand that very easily.'”
If Apple passed on this 10 percent tariff to consumers, it would price their entry-level new smartphone at $850. If pricing is hurting iPhone sales now, another substantial increase will only hurt more. To counter low sales in Japan, Apple lowered the price of iPhone XR by $100.
While this trade war has been a long time in the making, Tim Cook has had some reason to believe that Apple would be spared from the worst of it. He was able to keep iPhones out of the last round of tariffs and had a promise from the president that iPhones would be exempt. In another AppleInsider piece, they note that Cook has stronger relations with the Trump administration than they had with the Obama administration.
“Interestingly, Cook has found cabinet members in the Trump administration more accessible than their Obama era counterparts. In particular, the Apple chief has agreed on issues with Treasury secretary Steven Mnuchin and, to a lesser extent, commerce secretary Wilbur Ross, the [New York Times] report said.”
One of Trump’s campaign promises was that he would see to it iPhones were manufactured in the U.S. instead of China. He reiterated this promise earlier this year. He possibly mistook the Foxconn factory plans in Wisconsin as being related to iPhones. It isn’t. And he may still believe that tariffs will push Apple to leave China and build factories in the U.S.