Trump Tariffs Pressure Apple’s Bottom Line, But iPhone Prices Stay Frozen
Despite facing tariffs that could cost the company more than $1 billion in the current fiscal quarter, Apple resisted increasing prices on its smartphones, smartwatches, or AirPods.
Apple has chosen to keep prices unchanged on its latest iPhones, even as tariffs introduced by US President Donald Trump weigh heavily on the company's balance sheet.
At its annual product launch on Tuesday, the tech giant unveiled the new iPhone Air, alongside the iPhone 17, iPhone 17 Pro, an upgraded Apple Watch with health features, and the latest AirPods Pro.
The highlight of the event was the debut of the iPhone Air, a thinner handset fitted with a high-density battery and powered by the new A19 Pro chip. Apple hailed it as the most durable model yet, with CEO Tim Cook declaring, "We're taking the biggest leap ever for iPhone." The device will launch at $999, a price that falls between the company's other offerings.
The iPhone Air eliminates the physical SIM slot to accommodate a larger battery and boasts computing power comparable to a MacBook Pro, according to Apple executives. Equipped with two cameras, the handset is positioned to compete directly with Samsung’s Galaxy S25 Edge, and analysts say it could pave the way for Apple’s eventual entry into the foldable phone market, a segment popular in China.
Pricing Strategy Amid Tariff Challenges
Despite facing tariffs that could cost the company more than $1 billion in the current fiscal quarter, Apple resisted increasing prices on its smartphones, smartwatches, or AirPods, reported Reuters.. Instead, it opted to maintain the same price points as previous models. For instance, the iPhone 17 base model, offering 256GB storage, will start at $799—the same as the iPhone 16 with half the capacity. Similarly, the iPhone 17 Pro is priced at $1,099, holding steady against last year’s equivalent.
Industry experts suggest Apple is prioritising affordability for consumers during uncertain times. Tom Mainelli, head of IDC's Device & Consumer Research Group, noted, "They're leveraging their scale to try to keep prices where they are ... they're going to hold a line on prices and try to make it possible for people to upgrade between now and the end of the year at the same price as last year."
Apple shares dipped 1.6 per cent following the pricing announcement, reflecting investor caution about margins.
Expanding Features Beyond Smartphones
Beyond phones, Apple showcased innovations across its ecosystem. The AirPods Pro 3 now include real-time language translation—allowing two users wearing the earbuds to hold translated conversations almost instantly. The Apple Watch introduces a blood pressure monitor, pending regulatory clearance, which Apple expects will notify over one million people of potential health concerns in its first year.
Paolo Pescatore of PP Foresight remarked that the refreshed line-up strengthens Apple’s competitive edge: "This new device will bring a sense of newness to the iPhone, which has remained the same for too long."
AI and Chip Developments
Although Apple avoided detailed commentary on artificial intelligence competition, it leaned on its longstanding reputation for hardware innovation. The iPhone Air integrates new chips, including the "N1" for Wi-Fi and the "C1X" modem for cellular connectivity, previously supplied by Broadcom and Qualcomm. Shares of both suppliers fell after the announcement.
Apple emphasised its approach of embedding intelligence at the hardware level, contrasting with rivals such as Google, which are leveraging flagship phones to showcase AI models.
Balancing Innovation with Market Pressures
The decision to keep prices stable underscores Apple’s balancing act: maintaining consumer loyalty while absorbing tariff-related costs. Analysts believe this strategy positions Apple strongly against competitors in the US and Chinese markets, despite the financial strain.
As tariffs continue to shape the global tech landscape, Apple’s bet is clear—innovation and accessibility must go hand in hand to retain its edge.
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