Apple could face a customer loyalty crisis if tariffs boost prices, say tech analyst

Good morning. Tariff wars may cause many Apple customers to rethink their loyalty to avoid high prices.

“If the 145% China tariffs came into play, we believe Apple would have no choice but to start charging $2,000-plus for iPhone Pro once inventory levels came down,” Wedbush Securities analysts wrote in a note on Sunday. 

The tech giant has developed a loyal fan base of customers willing to pay premium prices for their products, like iPhones. Product differentiation, brand equity, and perception of value are part of the company’s strategy. However, research shows that increasing prices can negatively impact customer loyalty. And adding exorbitant costs to Apple customers would be a dealbreaker for many, Dan Ives, Wedbush Securities managing director, told me. 

Ives put it to me this way: “If someone charged you $7 for a slice of pizza, even the best slice of pizza, you wouldn’t buy it. So everything has a price.” As someone who grew up eating New York pizza, that resonated with me.

It seems Apple may have some breathing room before considering raising prices for U.S. customers. The Trump administration announced late Friday that some electronics, such as smartphones, were temporarily exempted from the 145% import tariffs on goods from China. That’s some relief for Apple, a company that assembles and imports devices in China. 

However, the break could be short-lived as in a social media post on Sunday, President Trump said “NOBODY is getting ‘off the hook'” while adding that the exempted products are “just moving to a different Tariff ‘bucket.’”

The impending tariffs and uncertainty could mean a change to Apple’s pricing strategy, which its new CFO had no intention to alter. Apple SVP and CFO Kevan Parekh began on Jan. 1, succeeding former CFO Luca Maestri, who held the role for over 10 years. Maestri leads the corporate services teams. Parekh participated in his first earnings call on Jan. 30 regarding the quarter that ended Dec. 28. An analyst noted that one of Maestri’s legacies was maintaining consistent pricing across the product range.

“I don’t think we’re going to really depart from what served us pretty well,” Parekh said on the call. Apple has had a “disciplined pricing strategy,” he said. “We’re going to continually kind of stick with that as far as I can tell.”

Amid ongoing tariff uncertainty, many Apple customers are flocking to stores to make purchases before any potential price bumps. “When you create that level of uncertainty, it causes chaos in the supply chain,” Ives said. 

Apple is facing a situation where CEO Tim Cook knows what is coming down the road and needs to make some adjustments, Wedbush analyst wrote in the Sunday note. “Cook being 10% politician and 90% CEO is an asset for Apple (and its investors) in this situation,” according to the note.

Sheryl Estrada
sheryl.estrada@fortune.com

This story was originally featured on Fortune.com