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Apple may need to increase iPhone prices to absorb tariff increase, analysts say

This trade war is about to get ugly.

The iPhone could be affected by the US-China trade war. 
Angela Lang/CNET

Beijing said Monday it would impose a 25% tariff on US goods, retaliation for President Donald Trump's plan to increase tariffs on goods imported from China. If smartphones aren't on the list of goods excluded from these tariffs, the iPhone may see price increases, Wall Street analysts say.

"We estimate Apple would need to take as much as 14% price increase on iPhones to pass on the higher costs as a result of potential expansion of tariffs," J.P. Morgan analysts said in a note to investors on Tuesday.

If Apple were to increase prices that would bring the price of an iPhone X to approximately $1,140.

The bank suggests that in lieu of a price increase, Apple may instead absorb the costs of the tariffs. This move, while not affecting the price of its product, would result in a 4% decline in revenue for the iPhone maker according to J.P. Morgan analysts.

Monday's news of a tariffs increase by China was just half of the day's bad news for Apple. The Supreme Court ruled Apple customers could sue the company for overcharging for apps in the App Store.

Apple didn't immediately respond to a request for comment. 

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