For a brief period in April when US President Donald Trump’s tariffs came crashing down on the world, executives up and down the aerospace supply chain warned the proposed duties threatened to reshape the industry as we know it.

And not for the better.

Analysts, consultants and executives, often in whispered tones, warned that the sector faced another major upheaval – one coming just as the industry was clawing its way out of the pandemic-era supply chain hole.

Some narratives went like this: US tariffs and other countries’ retaliatory duties would quickly inflate the cost of aerospace components and, in turn, the price of completed jets.

That, in turn, would prompt the world’s airlines to bifurcate in two groups, with US carriers aligning more closely with Boeing and everyone else clinging tighter to Airbus. Meanwhile, Europe’s aviation industry would tilt closer into alliance with China.

Trump’s tariff experiment is only a few months in the making and effects will take time to shake out. But several observations suggest the fall-out may be less devastating than feared.

First, Trump’s tariff salvos have come in typical Trump fashion: swift, sweeping and shocking, followed by re-evaluation and renegotiation to outcomes far less sweeping and shocking. It some ways, Trump’s style has caused more angst than the actual tariffs.

Second, the tariffs have not, at least not yet, upended the aerospace industry. And if you listen to aerospace executives, particularly those from US firms, you get the impression they are annoyed and unsettled by tariffs, but not too terribly concerned.

One might think Boeing, with its vast international sales network and wide supplier base, has more at risk than nearly any other player.

Perhaps not. Boeing’s top brass discussed tariffs at length during the company’s first-quarter earnings call in late April, and largely downplayed threats.

“The net annual impact of higher tariffs on our input costs is manageable and within our plan,” said Boeing chief financial officer (CFO) Brian West. “It’s less than $500 million annually.”

Keep in mind, Boeing had revenues of $66.5 billion in 2024.

Boeing chief executive Kelly Ortberg has noted that about 80% of Boeing’s supply chain spending is with US companies, limiting its exposure.

Yes, Boeing faces tariffs on widebody aircraft structures and other products imported from Japanese and Italian suppliers. But Ortberg said Boeing “should recover” a portion of that expense on jets it ultimately sells to non-US buyers – a tax refund called a “duty drawback”. Boeing exports about 70% of the commercial aircraft it produces.

Chinese airlines also briefly stopped accepting Boeing jets earlier this year amid the worst of the trade tension. But Boeing downplayed that issue, too, saying the company would have no trouble finding new homes for aircraft rejected by China.

“If necessary, we have the ability to assign those positions to other customers… We have many customers who want near-term deliveries,” Ortberg said.

“The strong market backdrop across the rest of the world still supports our planned production rate increases,” added West.

Also, Boeing has seemingly emerged as one of Trump’s favoured negotiating levers, being a major beneficiary of the president’s mid-May deal-making sweep through the Middle East, notes BofA Securities research analyst Ron Epstein in a 2 June report. Riyadh lessor AviLease struck a deal for 30 737 Max 8s while Trump was in Saudia Arabia, and Qatar Airways signed a record deal for up to 210 787s and 777-9s while Trump visited Qatar.

Epstein views such deals “as setting a precedent for future global trade negotiations, to [Boeing’s] benefit”.

Other aerospace manufacturers have also countered doomsday tariff predictions.

“At this point… we certainly don’t see [tariffs] as being something that is a material impact to the company,” Textron CEO Scott Donnelly said on 24 April.

“We seem to be in very good shape. We haven’t seen a tariff impact in terms of anything moving amongst our North American operations,” Donnelly added. “We do have some… suppliers that are either in Europe or in Asia, but so far the impact of that has been pretty de minimis.”

Brazilian manufacturer Embraer’s products face a 10% tariff when imported to the USA. But in May, Embraer CEO Francisco Gomes Neto said his firm’s “initial analysis points toward a limited impact”.

“We do not have, at least today, a setback on commercial [aviation], but it’s too early to confirm 100%,” he said. “We remain confident and reiterate our 2025 guidance… Embraer has a substantial amount of US content in its aircraft, which mitigates partially our exposure.”

TRUMP TACTICS

Trump kicked off his term in January by making good on his promise to tax imports – a strategy he says will reinvigorate US manufacturing. On 4 March, he slapped a 25% duty on Canadian and Mexican imports, though aerospace products have so far remained exempt per the United States-Mexico-Canada Agreement, a trade deal Trump negotiated during his first time in office.

Then on 12 March, Trump hit aluminium and steel imports with 25% duties; he has since threatened to hike the hit to 50%.

Those taxes will ultimately drive up prices for US aerospace manufacturers, though perhaps not too significantly. US firms source aerospace-grade aluminium from US cast houses that make the product from “pure aluminium”, a relatively low-value product imported from countries including Canada. As such, only about 30% of the $3-4/lb paid by aerospace companies for aircraft-grade aluminium is subject to the import tariffs, according to AeroDynamic Advisory managing director Kevin Michaels.

Boeing CFO West said in March that it purchases “nearly all” its aluminium and steel from US suppliers and that those metals account for only “1-2% of the average cost of an airplane”.

More tariffs came on 5 April, when Trump imposed 10% “reciprocal” tariffs on imports from all countries – again with exceptions.

Then on 9 April, Trump hit nearly 60 nations with additional tariffs, including 34% duties against China, 20% against the European Union and 24% against Japan – before immediately pausing the taxes except against China. From there, the USA and China fought an escalating battle that left each country taxing the other’s products at more than 100%. That spat, too, settled on 12 May when the USA and China reached a deal that left the USA charging 30% on Chinese imports.

More turmoil followed in late May when a US trade court ruled that Trump’s tariffs were illegal, saying the president had exceeded his authority. Trump won a temporary reprieve from an appeals court and is working to have the initial ruling thrown out.

It adds up to a boatload of uncertainty.

“No-one knows [the impact],” Jonathan Berger, managing director Alton Aviation Consultancy, said in April. “No-one knows how long they are going to last. No-one understands the formula. No-one knows the goal.”

“Ultimately, someone has to bear the additional cost on the system,” Aengus Kelly, CEO of aircraft lessor AerCap, said in April. “Who that will be – the ultimate consumer, the OEM, the airlines, ourselves – we have to wait and see.”

The aerospace industry has been treading cautiously – no doubt because Trump often publicly criticises individuals and companies that challenge his policies.

Still, executives have been making the case that the US and global aerospace manufacturing sectors have benefited enormously from operating largely tariff-free since 1980 under a treaty called the Agreement on Trade in Civil Aircraft.

“Global aerospace has a truly global supply chain, and it’s been very largely tariff free for the last 40 years. That has enabled, for example, Airbus to invest significantly in the US,” Robin Hayes, CEO of Airbus in the Americas, said in April. “In a world where that changes… this is going to raise the costs, and my view is the US industry has the potential to be one of the most-impacted.”

US executives have also stressed that their sector is a net exporter of aerospace products – hence, that US industry helps combat the trade imbalance that Trump says his tariffs will address.

Boeing has “been spending a lot of time making sure the [Trump] administration understands the implications” of tariffs, its CEO Ortberg said. “They understand. They know this is extremely important to the trade balance.”

“We will continue to advocate an approach that reestablishes zero-for-zero tariffs,” GE Aerospace CEO Lawrence Culp said, adding that GE also supports “efforts to revitalise US manufacturing”.

Aerospace manufacturers could adopt to tariffs by rearranging where they produce components, with US companies perhaps shifting more work stateside. But doing would take years.

“The aerospace supply chain is highly complex, and because of the regulatory nature of this industry, you don’t switch suppliers quickly. This is something that is going to take a long time to unravel,” says Mark Norton, executive director of the Washington state-based Northwest I-90 Manufacturing Alliance.

“There’s a high level of concern because of how many products and components and assemblies are outsourced offshore.”

PRICE-HIKE WARNINGS

Some firms have made clear they may hike prices to offset tariffs. GE is considering a “tariff surcharge”, said its CFO Rahul Ghai.

Olivier Andries, CEO of Safran, which owns engine maker CFM International in partnership with GE, said, “We are engaged with customers – OEMs and airlines – and we will not be shy and will apply the tariff surcharges to the airlines and our customers”.

Trump has also warned of hiking the USA’s 20% tariff on imported EU goods to 50%, citing frustration with the trade talks.

Airbus faces some exposure to those tariffs, but its A220 and A320neo assembly site in Mobile softens the blow.

US airlines need not pay duties on new jets assembled there, though Airbus pays tariffs on subassemblies and other European-made components shipped to Mobile, and on components shipped from the USA to its Chinese lines in Tianjin, Airbus CEO Guillaume Faury said on 30 April.

Barring creative workarounds – and options do seem to exist – US airlines must pay tariffs on jets produced by Airbus in Europe. In April, however, Delta Air Lines CEO Ed Bastian said flat out that his company “will not be paying tariffs on any aircraft deliveries we take”.

Bastian did not elaborate and the airline declines to comment. But fleet data provider Cirium shows that the last A350 received by Delta – an aircraft now in service with Delta – is owned by an “undisclosed bank/broker/lessor”.

Airbus CEO Faury said his team is “working on opportunities to export to somewhere else than the USA, especially for airlines who have international operations”.

“Or, we’re finding arrangements with several customers with their network, their partners, on how to deal with the situation,” Faury added. “And sometimes we’re in a situation where the airline ends up accepting to pay the import duties to the US administration.”