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Shipments stopped. War rooms set up. Contracts renegotiations to come. The aerospace industry has already started responding to President Donald Trump’s tariffs on the rest of the world, and it isn’t pretty.
In fact, some people are practically terrified.
“Tariffs are definitely a big red,” says Gary Weissel, managing officer at Tronos Aviation Consulting and an interiors market expert who has spoken at countless industry events, including Aviation Week conferences. “We’re already seeing that, and we’re already seeing tariffs becoming a big concern in the interiors industry, hampering deliveries.”
On April 2, President Trump emerged in a White House ceremony to unveil new taxes on American consumers based in tariffs on foreign goods imported inside the U.S. from other countries. There is a baseline 10% tax applied seemingly around the world, while several countries will be hit by tariffs levels that are multiples of the baseline. For instance, Chinese imports will see 34% more tax from the latest salvo; European Union goods 20%; Vietnam 46%; Taiwan 32%; India 26%; and Japan 24%.
However, when compounded with other protectionist policies already announced by the Trump administration, some countries will see even higher total rates. For example, Chinese goods will see 54% tariffs generally, according to U.S. Commerce Secretary Howard Lutnick.
It was not immediately clear about cumulative effects on cross-border aerospace and defense supply. Lutnick said April 3 that Trump was not interested in product-by-product negotiations and was taking a country-by-country approach. According to a White House statement and several news reports, goods from Mexico and Canada that comply with the U.S.-Mexico-Canada trade agreement, the revised NAFTA structure, will largely remain exempt from these new tariffs, except for auto exports and steel and aluminum that fall under separate tariff policies.
Tariffs will roll out starting April 3 and in coming weeks. But reverberations were already hitting aerospace trade before Trump made his announcement.
Weissel told a Bloomberg Intelligence webinar March 24 that U.S. Customs and Border Protection have stopped inbound aviation shipments and struggled with applying tariffs that include determining U.S. content and how much aluminum content there is and where did it originate.
“Multiple major suppliers have set up war rooms to try to analyze and plan to deal with tariff issues,” according to Weissel. In turn, they are warning suppliers that price renegotiations could be coming. “We are really starting to see that real world starting to happen,” he says.
To be clear, OEMs and Tier 1s are more sanguine about tariffs for the moment. They sit on mountains of built-up inventory from pandemic-era backups, and of course, as the customers of subtier suppliers they get to call the shots, as well as rely on their enormous financial resources to muddle through. Also mitigating the near-term effects at the top are: 1) most of Boeing’s supply chain is U.S. based, 2) Airbus has a final assembly line for narrowbodies in Mobile, Alabama, and 3) both already have long-term agreements established for parts and raw materials such as aluminum.
But in a March 11 report, Bloomberg analyst George Ferguson outlined how it is in new parts from lower-tier suppliers that tariff effects really would start to bite, in part because the ability to alter the supply chain is laborious.
“Aerospace suppliers are difficult to change, leaving little near-term flexibility in a tariff dispute,” Ferguson noted. “Most aerospace components have one to two active suppliers and are capacity constrained. Suppliers must be certified by a regulatory agency like the FAA or the European Union Aviation Safety Agency, which review the process and machinery to be used.”
A supplier building to a manufacturer’s specifications could take about a year to certify a replacement, while a design-build supplier that owns the intellectual property but is new to a program may need 2.5 years, according to Alex Krutz of Patriot Industrial Partners, a manufacturing consultant and guest Aviation Week columnist.
More clarity over Trump’s tariffs may emerge in coming days, week and months—hopefully—but whenever it comes, it will only be the beginning of when the aerospace supply chain starts to adapt to the global supplier regime. Until then, fear of the unknown will tax everyone.
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