This post was originally published on this site
Not since the lights nearly went out on TikTok have U.S. consumers been so rattled. That might be an overstatement, but President Donald Trump has shown he has the power to save or cause trouble for companies that don’t adhere to his political agenda — and Apple is no exception.
In addition to promising a 50% tariff on the European Union, unless E.U. leaders come to an agreement with the Trump administration within approximately nine days, the president threatened Apple with punitive action, pledging 25% tariffs on any iPhone sold, and not made, in the U.S.
“I have long ago informed Tim Cook of Apple AAPL that I expect their iPhone’s [sic] that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else,” Trump posted on Truth Social, his social-media platform, on Friday.
Ming-Chi Kuo, TF International Securities analyst, said the costs would likely make such a move prohibitive. “In terms of profitability, it’s way better for Apple to take the hit of a 25% tariff on iPhones sold in the U.S. market than to move iPhone assembly lines” to the U.S., he said.
Is it a good time to buy a new iPhone?
If experience is indicative of what will happen, Trump’s latest social-media posts suggest that he is ready for a trade war, but perhaps even more intent on bringing E.U. leaders to the negotiating table. A 25% tariff would mean hundreds of additional dollars on an iPhone price tag.
Prices for the iPhone product line start at $799 and go as high as $1,599 for the iPhone 16 Pro Max. That’s a month’s rent for the average American. The iPhone 16 is powered by an “A18 Bionic” chip, integrates artificial intelligence into its camera control and has 85% recycled content.
There’s a lot to like about the latest device, which was released last September. It uses an ultrawide camera for automatic focus that will be able to take better pictures in darker environments. The new chip will be 60% faster than my iPhone 12’s central processing unit.
A 25% tariff would mean hundreds of additional dollars on an iPhone price tag.
If your current iPhone is on its last legs, cracked or slowing down, and you’re an Apple aficionado, the iPhone 16 is a win-win. Consumers are dazzled by the new features, and since iPhone prices march steadily upwards, it is a “good time,” even without the tariff threat, to upgrade.
The downsides are, perhaps, obvious. In his review, Alex Kidman, who writes Alex Reviews Tech, said the iPhone 16’s 60Hz screen at this price is “indefensible,” and cited “inconsistent battery life and overly hot Qi2 charging.” (60Hz means the screen updates 60 times every second.)
“That’s disappointing, and it absolutely feels as though Apple’s just holding back 120Hz to make the Pro models feel more premium, especially when you consider that you can get a 120hz refresh rate on Android phones that cost less than a quarter of the iPhone 16’s asking price,” he added.
Related: Ships are canceling crossings to U.S., and Trump’s new 50% E.U. tariff threat isn’t going to help
The upgrade cycle is picking up pace
People are upgrading at an increasing rate, despite warnings from some retail experts that Apple’s brand power is weakening. In fact, more iPhone buyers are retiring their devices at an earlier stage in their devices’ life cycles, according to data for the fourth quarter of 2024.
More buyers are retiring “younger” iPhones, according to Consumer Intelligence Research Partners. Some 36% of iPhone buyers in the 12 months ending December 2024 reported having their previous phone for two years or less, compared with 31% in the prior year.
“Except for the disruption of the COVID-19 pandemic in 2020 and 2021, the holding period steadily increased since 2014, when CIRP began tracking this data,” the researchers wrote. “In the most recent quarter, we saw a slight change to that trend.”
Making big purchases based on Trump’s trade wars is similar to trying to time the market.
The uptick in upgrades is due, at least in part, to Apple Intelligence, the company’s array of AI-powered features, mobile-phone carriers competing to offer the most attractive upgrade packages, and, as the latest tariff debacle illustrates, fears that the price keeps rising.
There’s no right or wrong answer. However, making big purchases based on Trump’s unpredictable trade wars is similar to trying to time the stock market — unless you’re in the market for a new car, where prices will continue to rise. (In which case, go ahead and upgrade your old jalopy.)
This is not just a question for your old iPhone. It’s a question for your finances. There’s a reason why some Americans — including Warren Buffett — are stockpiling cash right now. Tariffs push up the cost of goods and the cost of doing business.
The wider economic environment
Andrzej Skiba, head of U.S. fixed income at RBC Global Asset Management, said the environment surrounding Trump’s trade approach may also ensure that borrowing costs remain elevated. “The Fed,” he said, “won’t likely be able to cut rates in this environment.”
Apple is a useful piece of technology, but it’s also an expensive buy, even without a 25% increase in costs. If you’re feeling anxious about your financial future, hang on to your iPhone (and your Tesla TSLA). Do you have at least six months of expenses saved? If not, do that first.
Some food for thought for would-be upgraders: The household savings rate in the U.S. fell to 3.9% in March from 4.1% in February. It averaged 8.4% from 1959 until 2025, reaching an all-time high of 32% in April 2020 and a record low of 1% in July 2005, according to Trading Economics.
Here’s a more timely question to ask: “Is this a good time to buy luxury goods?” Or even: “Is this a good time to spend money?” If you are nervous about the wider economic environment and your own level of savings, you can afford to weather a crack or two on your iPhone.
There are CDs out there with your name on them.
More stories from Quentin Fottrell:
Recession indicators are out of control. When will this madness end?
