The bank broke down the costs of making and selling the iPhone XS with no tariffs, which is about $1,000, versus what it would cost if a 25% tariff hits China-made parts. That would take the iPhone's retail price up to $1,142, the firm calculates.

"We estimate a price increase of around 14% is required to absorb the impact of a 25% tariff, keeping margin dollars for all players in the supply chain constant," J.P. Morgan said in a note to clients Tuesday.

If President Donald Trump decides to slap tariffs on the remaining billions of dollars worth of Chinese goods, Apple may need to raise iPhone prices significantly to offset the higher costs of parts, according to Wall Street analysts.

Although Trump has not decided to slap tariffs on an additional $300 billion worth of Chinese goods, the Office of the U.S. Trade Representative formally began the approval process on Monday. The earliest the new tariffs could go into place would be June 24.

Moving iPhone production exclusively to America is an option for Apple, Bank of America Merrill Lynch said Tuesday. The bank estimates a 20% price increase to the iPhone if 100% of the phone is manufactured in the U.S.

"We estimate the incremental cost of manufacturing iPhones in the U.S. could be 15-25%, and, if passed on to consumers could lead to demand destruction, in our view," the Bank of America said in a note.

But J.P. Morgan said Apple is more likely to absorb the cost of tariffs and take a hit on its earnings rather than raise the price of the phone. The bank estimates a total iPhone gross margin decrease of 4% if Apple doesn't pass the tariff costs on to customers.

Apple's stock is down more than 11% since the start of the trade war on May 2.

— With reporting by Michael Bloom.