With the Trump administration announcing new tariffs of 10% for all imported goods starting April 5, 2025, followed by additional “reciprocity tariffs” starting April 9 from April 9, the U.S. has the largest trade deficit with the U.S., and the industry is concerned about rising costs and long-term damage to its supply chains.
The U.S. aerospace industry is supporting the turmoil. With the Trump administration announcing new tariffs of 10% for all imported goods starting April 5, 2025, followed by additional “reciprocity tariffs” starting April 9 from April 9, the U.S. has the largest trade deficit with the U.S., and the industry is concerned about rising costs and long-term damage to its supply chains.
These “reciprocal tariffs” target several key trading partners:
- – China faces the steepest hike, followed by 34% and
- – Indonesia is 32%
- – India is 26%
- – Japan and Malaysia are 24% respectively
- – EU is 20%, both
- – Israel and the Philippines are 17%
Since then, earlier moves imposed a 25% tax on imported steel and aluminum, which is essential for aerospace production.
While the government believes these measures are necessary to reduce the U.S. trade deficit and promote domestic manufacturing, aviation leaders disagree. They say their industry is fundamentally different and already provides a trade surplus by importing more exports.
According to Flight Global, Dak Hardwick, vice president of international affairs at the Aerospace Industry Association (AIA), stressed that industry leaders are actively trying to help governments understand that aerospace and defense are fundamentally not like other manufacturing sectors. He said they are working on continuous efforts through meetings and calls to explain the uniqueness of their industry.
The aerospace sector also faces key challenges that tariffs may be worse. Hardwick noted that establishing new manufacturing facilities in the United States is not a quick and easy task. Certification can take up to three years and will last up to 10 years to fully operate. He noted that complicating the problem further, the United States lacks the surplus of skilled aerospace workers. Hardwick added that in fact, labor shortages have limited suppliers’ ability to meet growing demand.
Mark Norton, who represents aerospace company in Washington State, also raised cautionary attention, saying that it would be a mistake to assume that we can replace all foreign-made components immediately. He said the aerospace supply chain is very complex and strictly regulated, and that it is almost impossible to achieve any rapid changes. As many parts are still being produced overseas, there is a growing concern about the ripple effect of these tariffs across the industry.
What does the tariff mean for India
For India, a 26% reciprocal tariff could create a shadow over Boeing’s growing aerospace link. In 2023, Air India has placed huge orders for 220 Boeing aircraft and a choice of 70, marking a deepening partnership. However, the new tariffs could increase costs for Boeing, potentially slowing production or raising prices, which could delay delivery to Indian carriers. As Air India’s CEO has expressed concerns about Boeing’s quality issues in early 2025, any tariff-induced damage could further form the relationship, prompting India to reconsider its reliance on U.S. manufacturers or seek alternatives like Airbus.
In addition to India, other countries investing in the U.S. aerospace market have also caused alarm bells. Japan faces a 24% tariff, providing Boeing’s 787 Dreamliner with key components such as carbon fiber and titanium parts. Any costly hike or Tokyo’s retaliation could undermine production schedules, leaving Boeing and its customers scrambling to make adjustments.
Smaller suppliers, often running on the edge of the razor, are particularly vulnerable. Industry analysts predict that many people may not be able to get under the total pressure of tariffs and the total pressure to pass costs to larger manufacturers. This could lead to integration or a complete closure, further centralizing supply chains and reducing resilience in already tight sectors.
Widespread economic impact…
The wider economic impact is another concern. Aerospace exports are a highlight in the U.S. trade balance, which may not face the same tariff-driven cost increase if international buyers turn to competitors like Airbus. The risk of losing market share is enormous, especially in fast-growing regions such as the Asia-Pacific (A-PAC), where demand for new aircraft is soaring.
As costs rise, suppliers are expected to take most of the burden, putting pressure on the entire supply chain, all of which can be reached to top companies like Boeing. Boeing itself has not made public comments, but its CEO Kelly Ortberg told the Senate that 80% of Boeing’s parts come from outside the United States and 80% of its aircraft are delivered to foreign buyers.
United Airlines CEO Scott Kirby expressed caution optimism, saying the goal of creating a stable middle-class job makes sense. But not everyone shares his hopeful view. Many in the industry are struggling to find any real benefits, expecting price increases, supply chain delays and long-term disruption.
Kevin Michaels, managing director of aerospace consulting firm Aerospace consulting firm, criticized the tariffs in an April 2nd post. “It won’t end well. Inflation and the trade war are on the way – just as the United States is doing well in the global economy.”
There is also a legal and historical perspective. Since 1980, aircraft sales have not been subject to tariffs from the United States and other countries under the Civil Aircraft Trade Agreement. Hardwick stressed that this obviously benefits the United States, saying: “We can prove that the priceless aerospace industry is good for the country. We have represented the strong production economy the government is looking for.”
Nevertheless, the aerospace sector now finds itself trapped in a widespread trade policy shift. These tariffs are not to strengthen one of the best industries in the United States, but to ultimately take it root.
(The author of this article is a defense, aerospace and political analyst based in Bangalore. He is also the director of Add Engineering Gmbh, Germany’s Add Engineering Components, India, Pvt. Ltd.
(Disclaimer: The views expressed above are the author’s own views and do not reflect the views of DNA)
