Apple iPhone production costs set to increase following Trump tariffs

Apple Inc. could see the production costs for its flagship iPhone rise 2-3% given the impact that trade tensions between the U.S. and China are having on input materials like lithium batteries, according to Wedbush analyst Daniel Ives.

Ives cautioned that the impact could easily get worse for Apple, which he described as the “poster child’’ for companies facing trade-related headwinds. The company relies on Chinese labour for the production of nearly all of its devices, and it derived nearly 20% of its 2018 sales from the Chinese market, according to the data compiled by Bloomberg.

If the Trump administration levies additional tariffs, “this would be more of a potential game changer from the perspective of the incremental costs to Apple and its iPhone production,’’ Ives wrote. Under this “more draconian scenario,’’ expenses could escalate “by roughly 10% plus over time.’’