US President Donald Trump announced on May 12, that he spoke with Apple CEO Tim Cook amid reports that Apple may raise prices for its upcoming iPhone lineup this fall.

The Wall Street Journal reports that the price hikes are being considered alongside new features and designs.

Apple aims to avoid the perception that these increases are due to US tariffs, though the company has not commented on the strategy.

Trump did not address the price increases directly but emphasized his belief that Apple will expand its US investment beyond the US$500 billion commitment made in February.

Apple is also diversifying its manufacturing, planning to import most US-sold iPhones from India by the end of next year to reduce reliance on China.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Apple’s strategic price stability amid a decade of premium positioning

Despite regular criticism about high prices, Apple has maintained the same $999 entry point for its flagship iPhone since 2017 with the iPhone X, showing remarkable restraint in its flagship pricing strategy1.

This stability follows a period of consistent price increases from the original $499/$599 iPhone in 2007 to breaking the $1,000 barrier with the iPhone X, demonstrating a clear long-term premium positioning strategy2.

Historical data demonstrates that Apple can command higher prices because iPhone demand has become increasingly inelastic over time, with consumers demonstrating less sensitivity to price increases as more models were released3.

This pricing power explains why Apple’s revenue continued to grow even when unit sales flattened. The company effectively increased its average selling price through premium positioning and storage tier upgrades rather than headline price increases1.

The current pricing decision comes at a critical juncture where smartphone growth is slowing globally, with forecasts showing modest 2.3% growth for 2025, potentially making price increases riskier than during previous product cycles4.

2️⃣ The tariff balancing act: Apple’s long history navigating trade tensions

This isn’t Apple’s first encounter with tariff challenges under Trump. During his previous administration, Cook successfully lobbied for exemptions that protected Apple products, demonstrating the company’s significant political influence in navigating trade policy5.

Previous analyses from 2019 showed that a 10% tariff would cost Apple approximately $1 billion monthly in additional duties, forcing the difficult choice between eroding profit margins or raising prices6.

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