Apple could have to raise iPhone prices due to tariffs or face earnings hit

Apple iPhone
Apple iPhones could see a price hike with tariffs unless Apple wants to take an earnings hit. (FierceWireless)

Apple would have to raise the price of the iPhone by $68 on average to offset the damage from the 15% tariff on Chinese goods that took effect Monday, one analyst said.

With an average iPhone selling for $750, that would raise the average sales price to $818, according to an estimate by Shawn Harrison, an analyst for Longbow Research.

Harrison also estimated that Apple’s annual earnings per share would drop 19 cents to 20 cents unless Apple raises prices to cover the tariffs.

Sponsored by Infosys

In Conversation with Antonio Neri, President & CEO – Hewlett Packard Enterprise & Salil Parekh, CEO – Infosys

Hear the CEOs of Infosys & HPE discuss the current crisis and how it has accelerated the need for digital transformation for their clients. Connectivity at the Edge, right mix of hybrid cloud, ability to extract data faster than ever before… these are just some of the contributions that HPE and Infosys make to our clients’ digital transformation journey.

Certain Apple products in the wearables category could still be sold without a change in price or an impact on earnings, but the next round of tariffs in December could lower Apple’s earnings by more than $1 a share, Harrison said.

On CNBC on Tuesday, Harrison said his numbers are based on an estimate of $30 billion in Apple sales in fiscal 2020, of which about 35% would be sold in the U.S. and subject to the 15% import tariff, yielding a total cost of $983 million.

Apple shares dropped about 1.5% on Tuesday.

RELATED: Apple develops proximity sensor for mixed reality headset fingertip controller


Suggested Articles

Working with Jacoti of Belgium, Qualcomm wants to make earbuds recognize the hearing anomalies of users.

Deep learning is one of the most promising techniques for training machines to "think" like people.

Tally upgrade from Simbe Robotics uses Nvidia Jetson GPU for edge processing and Intel RealSense LiDAR for higher resolution images