President Trump's 34% tariff increase on Chinese goods, set to take effect on April 9th, has put the iPhone in a precarious position. With Apple's shares dropping almost 10% - the worst drop in about five years - the market is bracing for the potential impact of the tariffs on iPhone prices. However, analysts believe that Apple may not immediately pass on the extra cost to consumers.

Gerrit Schneemann, a senior analyst at Counterpoint Research, suggests that Apple's margins, historically around 38%, provide a cushion to absorb the costs of the tariffs in the short term. "I don't foresee them... on a short-term basis just raising prices unnecessarily," Schneemann told The Verge. He predicts that if the tariffs persist, Apple may consider a price hike with the release of the iPhone 17 in the fall.

The tariffs have also raised questions about the possibility of Apple shifting its manufacturing operations to the US. However, Schneemann believes that establishing a meaningful US smartphone industry production hub is unlikely due to the prohibitively high costs involved. Apple would need to set up supply chains, a workforce, and manufacturing facilities, which would be a significant undertaking.

Instead, Apple is likely to continue manufacturing iPhones overseas and finding ways to mitigate the impact of the tariffs. Schneemann notes that Apple has already been working with its supply chain to absorb some of the additional cost, which is a strategy the company has employed in the past. Additionally, the way consumers purchase iPhones in the US, often through carrier subsidies, may help cushion the blow of any potential price increases.

The uncertainty surrounding the tariffs, including the possibility of them being pushed back or changed by a future administration, adds to the complexity of the situation. As the tech industry waits to see how the tariffs will play out, one thing is clear: the iPhone's pricing and production strategy will be closely watched in the coming months.

The Verge has reached out to Apple for a comment and will update this story if the company responds.