Key Points
- Apple will need to hike prices around 9% to mitigate the effect of tariffs put into place by President Donald Trump, according to Bank of America.
- Apple has been under the microscope amid the ongoing tariff discussions.
Apple will need to hike prices around 9% to mitigate the effect of tariffs put into place by President Donald Trump, according to Bank of America. The firm projected that the tech giant will have to increase prices on iPhones, iPads and other products by that amount, with the assumption that all of the products will be subject to at least a 10% tariff. Analyst Wamsi Mohan warned that the company’s earnings could take a hit no matter how it responds. Wamsi’s analysis comes as Wall Street and Main Street alike scramble to predict the ramifications of Trump’s sweeping plans for levies on imports. Those concerns were ratcheted up after the president last week signed a memorandum imposing “reciprocal tariffs” on foreign nations. Apple has been under the microscope amid the ongoing tariff discussions. Shares fell earlier this month after Trump announced 10% tariffs on China, the country where Apple assembles most products. Bank of America’s Mohan reviewed scenarios where Apple either keeps pricing the same in the U.S. or raises them as a result of tariffs boosting costs. If Apple doesn’t lift prices, he said there would be a loss of 26 cents in earnings per share, or 3.1%, in calendar year 2026. Meanwhile, an increase of about 3% to prices would result in an earnings per share drop of 21 cents, which equates to a 2.4% slide, during the same period. This is because the analyst assumes higher prices would reduce the number of devices Apple sells by 5%. However, if the higher price tag doesn’t reduce sales, the tariff hit could be even smaller, Mohan said. With this in mind, Mohan said a 9% price hike would be needed to offset the burden of the tariff, combined with the potential hit to sales volume. Trump’s plan for reciprocal tariffs nixed a potential workaround for Apple to avoid some of the levies slapped on China, according to Mohan. While most iPhone models can now be manufactured in India, the reciprocal tax is expected to be higher than the 10% fee faced by China, he said. About 15% of iPhones are currently produced in India after years of shifting manufacturing to the country, the analyst said. Despite these calculations, Mohan reiterated his buy rating on Apple, saying the tariffs seem “manageable.” His $265 price target implies 8.4% upside over Tuesday’s close. Shares rose slightly in Wednesday’s session, bringing its year-to-date loss to 2.3%. Apple on Wednesday announced a cheaper iPhone 16e model that is powerful enough to run artificial intelligence. AAPL YTD mountain Apple, year to date