Companies in the US are undoubtedly facing the consequences of the Trump "reciprocal" tariffs, and telecom giant AT&T is signaling that this could translate to higher prices for the devices customers rely on daily.
On the company's recent first quarter 2025 earnings call, AT&T Chairman and CEO John Stankey made it clear that if import taxes increase the cost of smartphones, consumers will likely bear the brunt of it. You can find the full transcript here.
When asked about the potential impact of tariffs on handset costs, Stankey did not mince words. He stated:
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.
He added that he did not foresee substantial changes in how much the company subsidizes devices right now.
The thing with tariffs is, they are essentially a tax on imported goods, and for a company like AT&T that buys handsets manufactured overseas from vendors, these taxes crank up the direct cost before the product even reaches the customer.
While companies have historically found ways to help customers manage rising handset costs, like through extended installment plans, Stankey's comments suggest any significant tariff-driven price hike will mostly land on the consumer's plate. The gamble is that customers will prioritize keeping their essential phone service but might hold onto their current phones longer before shelling out for a new, more expensive one. This could mean handset upgrade cycles, which already stretch beyond three years for many, could become even longer.
Stankey put this potential price jump into a broader picture, saying that "handsets are just one part of a broader ecosystem of decisions that consumers are going to have to make on goods and services." And this wider ecosystem idea is playing out in the real world, with these trade policies hitting all sorts of tech gadgets we use every day. Think about companies like Nintendo and Framework, for example, both of which rely heavily on manufacturing in Asian countries targeted by tariffs.
Nintendo, the company behind beloved video game consoles, has been impacted by tariffs on products from manufacturing hubs like Vietnam and Japan, reportedly facing some significant tariff rates on imports. These increased costs are believed to have played a role in delaying US pre-orders for the highly anticipated Nintendo Switch 2 as the company figured out the situation.
Similarly, Framework, known for its laptops designed to be repairable, has been directly hit by tariffs on products from Taiwan and China, with rates hitting as high as 32% or even over 100% on certain parts. This tariff squeeze forced Framework to temporarily stop selling some of its cheapest laptop setups in the US because they were just not making money at their original prices. The company also had to bump up prices on other models by around 10% to help cover the extra cost before eventually adjusting pricing down a bit when some tariff rates were lowered.
Even tech giants are not spared. A report earlier this month stated that Apple might expand iPhone production to Brazil (where the tariffs are much less compared to China, at 10%), in order to lessen the impact of the tariffs.
Speaking of other big players in the market, AT&T is not alone in planning to pass these potential tariff costs onto consumers. Reports following Verizon's recent earnings call indicate that the company is taking a similar stance. Verizon CEO Hans Vestberg has reportedly stated point-blank that the company is not planning to absorb major tariff increases on handsets. According to Vestberg, "If the tariff is going to be as high as they say on the handset, we're not planning to cover that in our work. That's just not going to be possible," He was quite clear, adding, "We will not cover any enormous increase on tariffs on handsets. That's ultimately going to hit the consumer in the market."
Beyond the direct cost of devices, these tariffs throw a wrench of general economic uncertainty into the works for companies. Stankey summed it up by saying that "All companies in the U.S. are now operating with less visibility as the administration pursues policies that are intended to facilitate its laudable goal of creating more equitable global trade and improve domestic manufacturing capabilities."
Source: Fierce Network
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