T-Mobile, Verizon, and AT&T warn that phone price hikes may be inevitable

The head officers of the three largest US cell phone carriers - Verizon, T-Mobile, and AT&T - have all cautioned that they won't be able to absorb any phone price increases that result from the newly minted tariffs on foreign products.

While smartphones and tablets have earned a pause in reciprocal tariffs for now, they would still be subject to the Trump administration's 10% general rate, or double that for those made in China. The situation is still being assessed by the big three US carriers, but their CEOs have all warned in unison that they will pass any price increases onto the consumer. 

According to Verizon's CEO Hans Vestberg, "if the tariff is going to be as high as they say on the handsets, we are not planning to cover that in our work" and "we will not cover any enormous increase on tariffs on handsets."

A Verizon iPhone 16 Pro Max, for instance, that currently goes for $1,199 over at Best Buy before the carrier's trade-in offer for up to a grand off, would increase in price to $1,439 if the current valid levies are applied. People have been frontrunning the increase and buying iPhones in droves lately, which may result in a lull in demand later. When that inventory is depleted and even if Apple shifts production of US-bound iPhones from China to places with lower tariff rates, there will still be a price increase.

"So I think that if ultimately, costs are passed to us from those that we buy handsets from, unfortunately, for the customer, we're going to have to come up with some new ways for them to figure out how to digest that increase in pricing," said AT&T's John Stankey.

I don't see the business model dramatically changing to accommodate subsidy levels that are much different from what's out there today and the modest adjustments we make to those day in and day out, but we'll find different creative ways to build plans and approaches and supports that allow them to continue to use the network effectively and do what they need to do and feel good about it.

Given that last year Apple held half of the US smartphone market with 49.9% share, followed by Samsung with 21.4% and Motorola with 9.4%, the team from Cupertino may be disproportionately exposed to the tariff price hikes. Apple is reportedly preparing to move the release of cheaper iPhones to the spring, leaving the fall campaign for its most expensive Pro line of handsets to spread out the purchasing intent more evenly throughout the year.

It is also moving its US-bound iPhone production from China to India, but that may take time. The multibillion investment to produce devices in the US that it announced will take even more time, and would raise prices further, so T-Mobile's CEO is unambiguous that the hike will "have to be borne by the customer." "I mean, our model isn't prepared for something like that," he added.