Recent reports indicate that the U.S. government's new "reciprocal tariffs" could lead to price increases for Apple Inc.'s (AAPL, Financial) key products sold in the United States. This tariff challenge is considered the most significant test for Apple to date, according to Bloomberg.
Despite Apple's efforts to diversify and adjust its supply chain, as well as urging suppliers to cut costs, the implementation of these tariffs would still exert pressure on the company's costs and profit margins. Consequently, Apple may have to consider raising product prices in the U.S.
Historically, Apple has responded to tax policies, currency fluctuations, and inflation impacts by increasing prices in regions like Europe and Japan. While Apple could delay price adjustments until the launch of its next-generation smartphones, this could shift the focus from hardware upgrades to price hikes.
Bloomberg suggests that manufacturing Apple products entirely in the U.S. is not feasible in the short term. It would take at least five years to initiate production, potentially doubling the cost of Apple devices, which would be disastrous for both the company and consumers.
