Nintendo postponed the pre-orders for the Switch 2 in the US to try and figure out what to do about the tariffs that President Trump imposed on the two manufacturing hubs that Nintendo relies on – China (54%) and Vietnam (46%). The $450 retail price that was announced initially is quite likely to go up once the pre-orders are rescheduled. Apple makes most of its iPhones in China, but it has been boosting production in India too, including making Pro models for the first time (the tariff on imports from India is “only” 26%).
So, what will Apple do? Cupertino has reportedly been stocking up on inventory to soften the blow of the tariffs. Because once they hit, prices will skyrocket. A new report from The Wall Street Journal with info from iFixit and TechInsights breaks down the price of components for a 256GB iPhone 16 Pro and calculates the impact of the 54% tariff on China.
The total Bill of Materials (BoM) comes out to $549.73 (pre-tariffs) with assembly and testing bringing the cost up to $580. The most expensive components are the rear camera array ($126.95), the A18 Pro chipset ($90.85) and the display ($37.97). The 256GB storage costs $20.59.
Apple iPhone 16 Pro retail prices in the US
At retail, Apple sells a 256GB iPhone 16 Pro for $1,100. However, the tariff isn’t applied to the retail price but rather on the cost of the components. With that, WSJ calculates that the cost to Apple will go up to around $847 – an increase of $300.
Again, the tariff on imports from China is 54%, compared to 26% for India. Apple was wise to diversify its production base, but even if it starts building US iPhones in India, we’re still looking at a hefty increase in costs.
Apple has a solid profit margin on its products, which could absorb some of the impact – it did when the tariff was 10%. But we doubt that Apple will do the same now that it is 54%. Instead, it will pass some (most? all?) of that extra cost to consumers. The June 5 launch date of the Nintendo Switch 2 remains unchanged and the increase over the original $450 price should offer a clue of what to expect when the iPhone 17 series arrives in September (Nintendo is also famously protective of its profit margin).
Source (paywall) | Via