Smartphone Market Faces Slower Growth and Rising Prices Amid US Tariffs

The global smartphone market is entering a challenging phase as growth projections have been sharply cut, particularly in the US, due to increasing tariffs and geopolitical uncertainties. Counterpoint Research recently slashed its global smartphone shipment growth forecast for 2025 from an optimistic 4.2% to a much more modest 1.9%. The slowdown is driven primarily by expected price hikes linked to US tariffs, which are anticipated to hit both Apple and Samsung hard, reducing consumer demand and sales volumes.

Slower Growth and Rising Costs: A Detailed Overview

Counterpoint’s initial forecast for healthy global smartphone growth in 2025 at 4.2% has been dramatically revised downward to just 1.9%, reflecting growing concerns about the impact of US tariffs and other market pressures. While many regions are still expected to see some growth, North America and China are notable exceptions. North America faces declining sales largely due to tariff-induced price increases, while China’s growth remains almost flat as government subsidies have failed to stimulate significant market demand.

In the US, sales of flagship brands like Apple’s iPhone and Samsung’s devices are predicted to fall year-on-year. This decline is tied to the likely pass-through of tariff costs to consumers, meaning higher retail prices. Apple, which has so far absorbed these additional expenses, reportedly lost nearly a billion dollars last quarter by doing so. With the upcoming launch of the iPhone 17, there’s strong speculation that Apple will finally increase prices to offset these tariffs.

Despite some easing of the tariff burden compared to the worst-case scenarios previously imagined, the outlook remains cautious. The possibility of further tariff escalations under current political tensions could further disrupt pricing strategies, supply chain planning, and ultimately consumer demand. Counterpoint’s current forecast assumes tariffs will stay stable through 2025, but any renewed intensification could deepen the market impact.

In China, despite government subsidy programs aimed at stimulating smartphone sales, consumer response has been underwhelming, leading to nearly flat growth. This stagnation, combined with tariff pressures in North America, signals a challenging year for the global smartphone industry.

What Undercode Say: Analyzing the Impact on the Smartphone Market

The revised forecasts by Counterpoint Research paint a clear picture of a smartphone industry at a crossroads. After years of rapid growth fueled by innovation and expanding global demand, the market is now contending with significant headwinds that threaten to stall momentum.

The tariff situation between the US and China remains the largest single factor influencing these changes. Tariffs increase the cost of components and final products, forcing manufacturers to decide whether to absorb the added expense or pass it to consumers. Apple’s recent losses from absorbing tariff costs demonstrate the high stakes involved. But absorbing costs indefinitely is unsustainable, especially in an increasingly competitive market where consumers are sensitive to price changes.

The decision to pass tariff costs to consumers, as anticipated with the iPhone 17, could create a ripple effect across the industry. Higher prices typically suppress demand, especially for premium smartphones. Samsung and other manufacturers may follow suit, amplifying the impact on sales volumes in North America and other tariff-affected markets.

China’s stagnant growth also signals that government interventions, such as subsidies, may not be enough to sustain demand amid wider economic pressures. This suggests that the global market is not only grappling with trade issues but also with shifting consumer behavior and economic uncertainties.

For smartphone OEMs, these challenges highlight the need for strategic adaptability. Supply chain diversification, cost optimization, and targeted pricing strategies will become critical to maintaining profitability and market share. Manufacturers may also accelerate innovation cycles or explore new product categories like foldables or smart wearables to counterbalance slowing smartphone sales.

From a consumer perspective, the market slowdown and rising prices may drive increased interest in mid-tier devices or refurbished models, as budget-conscious buyers seek value without sacrificing performance.

Fact Checker Results ✅❌

Tariff impacts are confirmed to increase costs for smartphone makers, notably Apple and Samsung. ✅
Apple’s current absorption of tariff costs has reportedly cost nearly a billion dollars recently. ✅
Government subsidies in China have not significantly boosted smartphone sales growth. ✅

Prediction 🔮

Given the current trajectory, the smartphone market will experience slower growth globally, with North America and China leading the downturn. Apple is likely to increase iPhone prices with the launch of the iPhone 17 to offset tariff costs, potentially triggering a broader industry trend of higher consumer prices. This could lead to a shift in consumer buying behavior toward more affordable or alternative device options. Trade tensions and tariff policies will remain a critical variable influencing market dynamics through 2025 and beyond.