The cost of iPhones could increase dramatically, as Apple gets caught up in the trade war between the US and China.
On May 10, the office of the US trade representative announced it was raising tariffs from 10% to 25% on roughly $200 billion worth of goods imported from China.
Apple uses a Chinese supply chain for all its products, from iPhones to iPads and Mac computers.
The 25% tariff is levied on components rather than the devices themselves, so it's difficult to calculate the impact on retail prices.
However, Morgan Stanley predicts that the new tariffs could add about $160 (£124) to the cost of a Chinese-made iPhone XS, which starts at £999.
President Donald Trump insists that China will pay the costs of the higher US tariffs, but that's not how tariffs work.
The companies importing their goods from China are the ones who pay the duties.
So Apple will have to choose whether to absorb the costs and take a hit to its earnings, or pass the costs on to consumers by raising prices.
The company is reportedly attempting to reduce its reliance on China, and has considered moving some production to India or Brazil.
But although this could create a backup plan for suppliers, assembly processes would be far more difficult to replicate, according to Gene Munster of Loup Ventures.
"Apple will be exploring all options and this will be the definition of a slow turn because they really don’t have a credible alternative avenue to build phones," Munster told the Guardian .
"When Apple thinks about its business, it thinks in 10-year increments, so it makes sense for them to have other phone manufacturing and assembly that's not just focused on China."
The true cost of an iPhone over a lifetime
The news comes as a report by tech site musicMagpie reveals the true cost of an iPhone over a lifetime.
It found that, if consumers were to purchase an iPhone outright every time a new device came out, over the course of a lifetime this would cost a staggering £153,267.
If the average contract price is included, this adds on £41,076, making the total spend £194,343.
The site also worked out that the price of an iPhone has increased by 162% in the past 10 years, while the average hourly wage has increased by just 2.95% – from £11.88 in 2008 to £14.31 in 2018.
If consumers wanted to buy an iPhone XS, the 2018 flagship iPhone, the average person would need to work 70 hours to be able to afford it.
That alone is a 180% increase compared to the 25 hours needed to work in 2008 to be able to buy a new iPhone then.
"As we see each September, the brand-new iPhone becomes more advanced with amazing features, increased battery life and an improved professional grade camera," said musicMagpie's Liam Howley.
"These upgrades cost more and more each time – which we come to expect, but at over £1,000 a phone, the blueprint has been set for the newer era phones."
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