25% Tariffs Coming For All Imported Cars In April: Dc Watch

Aviation Week Network-Factory

Industry Clamoring To Take Part In Trump’S Missile Defense PlanAs the Trump administration’s proposed Golden Dome missile defense architecture continues to take shape, companies across the defense and space sectors are eager for a piece of what will likely be a sizable budget pie. The White House’s Jan. 27 executive order calls for the U.S. to build a vast shield of capabilities from the ground into space to protect against ballistic, hypersonic and other advanced missile threats. A novel element of the architecture would be space-based interceptors that can target and destroy adversary missiles during their boost phase. The Missile Defense Agency (MDA) and the U.S. Space Force are the key military stakeholders charged with crafting the Golden Dome, which officials note will be a “system of systems” of both existing capabilities and novel technologies. While the architecture remains very much in flux, prospective contractors—from missile defense primes to space situational awareness experts to remote-sensing suppliers—are already strategically placing the gilded phrase in marketing text, touting that the company is “ready for Golden Dome” and whatever the finalized version may be. While the budget for the Golden Dome has not yet been revealed, its sheer scale and ambition would require consierable funding. For some companies, the pending requirements for the space-based layer represent an ideal opportunity, offering a blank slate of a platform that can accommodate a wide range of their existing products. Sierra Nevada Corp. (SNC) and subsidiary Sierra Space, for example, say they are prepared to take on the challenge. As an incumbent supplier to the Space Development Agency, Sierra Space fills a key role in the Pentagon’s planned network of operational missile warning and tracking satellites. A graphic displayed by SNC at the Sea-Air-Space exhibition, held in early April outside of Washington, shows a host of other possibilities. It reveals a satellite-based interceptor called the Titan, along with an orbital vehicle that functions as a “magazine” for dispensing multiple interceptors. The concept appears similar to the Smart Rocks proposal from the original Strategic Defense Initiative (SDI) of the 1980s, which envisioned orbital battle stations carrying multiple interceptors. That idea was eventually replaced by the Brilliant Pebbles program. SNC may have several options for supplying orbital battle stations. The graphic at Sea-Air-Space also depicted a military version of the Dream Chaser—a crewed or uncrewed orbital vehicle in development by Sierra Space—functioning as an orbital fighter, launching Titan interceptors at incoming ballistic missiles. The SNC concept envisions a network of passive sensors named the Overture as well. Leveraging the company’s Gorgon Stare pod, which uses an array of optical sensors to track movements over a large area on the ground, the Overture sensors would instead be pointed at the sky, passively scanning for missiles overhead. The Overture sensors could be mounted on an array of SNC platforms, including high-altitude balloons and modified business jets. Booz Allen Hamilton recently unveiled a $25 billion concept for a Golden Dome upper layer, comprising 2,000 space-based interceptors dedicated to shooting down salvos of ballistic missiles during the boost phase. “Brilliant Swarms,” as the concept is called, offers a vivid illustration of the possibilities for a modern version of the space-based interceptor constellation once at the center of the Reagan administration’s SDI effort. In this case, the 40-80-kg (90-175-lb.) space vehicles would each function as a tracking sensor and hit-to-kill interceptor. The 2,000 satellites would be organized into 20 orbital planes in geosynchronous Earth orbit at 96-deg. inclination, featuring 100 vehicles in each plane. The interceptors would orbit in flights of five. “Imagine a constellation of satellites communicating with each other in real time and with a space-based transport layer, with each satellite serving as both a threat sensor and a hit-to-kill interceptor,” Booz Allen Executive Vice President Chris Bogdan said in a March 27 webinar. “This is a future state that is possible right now.” As ballistic missiles are launched, satellites passing overhead would transmit the tracking data into the networked constellation. Henry “Trey” Obering, another executive vice president with Booz Allen and a former MDA director, compared the operation to the 2008 shoot-down of a malfunctioning satellite by a U.S. Navy warship. The ship’s radar could not see the satellite, but it received offboard tracking data from other sensors that allowed the surface-launched interceptor missile to take off ahead of the satellite instead of being forced to chase it, Obering said. In a similar way, the Brilliant Swarms could cue satellite interceptors that are outside of the sensor range of the space vehicles themselves, he added. That approach could help to mitigate a known flaw in space-based interceptor architectures. Todd Harrison, a senior fellow at the American Enterprise Institute, estimated in January that the Golden Dome would require a constellation of 1,900 satellites to have enough in position to shoot down a salvo of only two ballistic missiles. An enemy then could simply overwhelm that constellation by launching a salvo of more than two missiles. “We looked at a launch from seven different sites inside Russia with a simultaneous salvo,” Obering said. “And the analysis showed that we would be in a kill position . . . with a significant number of those launches.” Stressing the need for swift decisions, executives from L3Harris Technologies say the company is ready to enter into full-rate production for space sensing and interceptor systems in support of the proposed Golden Dome architecture. Scott Alexander, president of missile solutions at L3Harris subsidiary Aerojet Rocketdyne, emphasized the company’s push to produce a greater “magazine depth” of existing and upcoming missile systems. “This will just lead to more and more interceptors across every range,” he said. L3Harris also aims to step up production of solid rocket motors to power booster stages of Northrop Grumman’s newly selected Glide-Phase Interceptor—the first missile designed to intercept maneuvering hypersonic vehicles while they are still gliding at high altitude. The company is investing $200 million into upgrading its infrastructure in Fort Wayne, Indiana, and Palm Bay, Florida, to support future missile defense production. It is also studying new manufacturing processes and development models to make sure it can move on the government’s timeline, said Kristin Houston, president of space propulsion and power systems at Aerojet Rocketdyne. “We know that there’s going to be a need to go from award to orbit in 18 months,” she told Aviation Week at the Space Foundation’s annual Space Symposium in Colorado Springs in early April. “Backing up from that means that the in-space propulsion piece probably needs to be ready in 10 months.” The MDA plans to host two high-profile missile defense events in Huntsville, Alabama, as it looks to draw a broader range of vendors into the mission area. The Next-Generation Missile Defense Summit and the Space-Based Interceptor Engagement were both scheduled to take place at Redstone Arsenal, Alabama, in late April, but the agency is now rescheduling the events; a new date has not been announced. The latter event, co-led by the MDA and Space Force, will serve as a robust discussion with industry, and nontraditional defense contractors are specifically encouraged to attend. The two agencies are looking for concepts for boost-phase interceptors as well as other technologies that are capable of post-boost, early midcourse or midcourse intercept that “show a path” to boost-phase intercept, a government notice states. The Huntsville event will allow stakeholders to assess “the art of the possible” within the private sector, Chief of Space Operations Gen. Chance Saltzman told reporters April 9 at the Space Symposium. “What can we do in the next 2-4 years? Let’s talk about that,” he said. After the Huntsville event, the Defense Department will debrief the White House with a list of systems that have been identified, specific programs in which to invest and a rough estimate of cost. That will then help drive the direction the administration will pursue, Saltzman added. “If we wait and try to engineer this to the perfect solution, we will never get started,” he said. “We will not get there fast enough.”

factory

17 April 2025

Aviation Week Network-Factory

After Tariffs, Aerospace And Defense Sees Nothing But UncertaintyThe global aerospace industry has grown into an economic powerhouse under an umbrella of free trade that for decades had largely been taken for granted. While the simple narrative has followed “American” Boeing and “European” Airbus, aircraft built by both companies contain thousands of components sourced from a vast, worldwide supply chain for everything from engines and fuselages to harnesses and brackets. That ecosystem has been turned on its head by U.S. President Donald Trump’s April 2 imposition of hefty tariffs on nations around the world. While the details are shifting by the day—Trump delayed many of the tariffs for 90 days while escalating a trade war with China—a cloud of uncertainty has enveloped commercial aviation, business aviation and aftermarket stations that dot the globe, and it has even extended to Western defense industries. Without the time to wait for more clarity, industry is responding. Executives, consultants and financial analysts point to the halt of imports, establishment of corporate war rooms and issuing of warnings to and by suppliers. In what some describe as a “chess move,” Howmet Aerospace has raised the prospect of declaring a “force majeure” event—uncontrollable circumstances that prevent a company from fulfilling a contract—over Trump’s tariffs. Other companies are mulling similar steps. What is more, U.S. access to China, the world’s second-largest aviation market and Trump’s primary trade target, is on pause. The Chinese government has told its airlines to stop taking delivery of any Boeing aircraft, sources told Bloomberg News. China Southern Airlines has suspended its sale of 10 used Boeing 787-10s and two additional GE Aerospace GEnx-1B70/P2 engines as reciprocal tariffs between China and the U.S. have made the aircraft unattractive to potential buyers. And Corporate Jet Investor reports that some pre-owned jet sales to China have fallen through. Aviation Week’s global team of reporters has spent April following industry’s reaction after Trump implemented a baseline tax of 10% on imported goods from almost every other country, as well as higher reciprocal tariffs on specific countries, including allies, and triple-digit taxes on Chinese imports. When those actions sent the U.S. bond market and the dollar tumbling, the administration abruptly paused many tariffs for 90 days and publicly flirted with exemptions for specific industries such as computers and smartphones. Where it all ends is anybody’s guess. “Since aerospace has largely historically been tariff-free, this is something that’s relatively new for us,” Patrick Markham, vice president for technical services at Fort Lauderdale, Florida-based parts supplier HEICO Aerospace, said at the Aviation Week Network’s MRO Americas conference in early April. “Until now, it has been relatively easy to move material from one side of the Atlantic to the other without imposing heavy fees. [Now] if we’ve got warehousing facilities that are in the UK or in Europe, does it make sense to not bring the parts across to the U.S. if they’re going to go back over there? There are a lot of mechanics that are going to need to be worked out, but it’s hard because we don’t know where it’s going to end up. It’s still very much early days.” Here we present what Aviation Week has learned as the global aerospace and defense sector faces an unprecedented, uncertain turn in its business case. Trump says his tariffs are aimed at reducing massive U.S. trade deficits with other nations. But numerous executives point out that the country’s aerospace industry enjoys a large trade surplus with the rest of the world and would suffer disproportionately in a widespread trade war. U.S. aerospace “exports six times to Europe the amount of trade that Europe [exports] into the U.S.,” Delta Air Lines CEO Ed Bastian noted on April 9 during the carrier’s first-quarter earnings call. “That’s a really important fact to know, and I hope our leaders in Washington are paying attention.” Airbus North America Chairman and CEO Robin Hayes echoed this. “Aerospace has been, for the most part, in a tariff-free environment for decades,” Hayes said April 8 at MRO Americas. “Let’s assume other countries introduce reciprocal tariffs. Then, actually, the U.S. aerospace industry is the one that will be impacted significantly . . . [because] the U.S. is a much bigger exporter.” But there are no winners in trade wars. All of Delta’s 43 scheduled deliveries this year are Airbus aircraft: 21 A321neos, 10 A220-300s, seven A330-900neos and five A350s. Bastian laid down a marker during the earnings call. “We will not be paying tariffs on any aircraft deliveries we take,” he said. “If you start to put a 20% incremental cost on top of an aircraft, it gets very difficult to make the math work.” Other aircraft buyers say that Boeing, which depends heavily on exports, would suffer more than Airbus if the U.S. is locked in a trade war with numerous nations. “If you make the U.S. an island, and Boeing is exporting a lot of aircraft, they’re going to be the biggest company impacted,” Bashir Hajjar, senior vice president and head of Americas at lessor AerCap, said April 3 at the Aviation Week Network’s CAPA Airline Leader Summit Americas in Grand Cayman. Hajjar noted that while Airbus delivers aircraft to U.S. customers, it exports many more to other countries—meaning that a trade war “could hurt Boeing a lot more than it could hurt Airbus.” What is unclear is whether aircraft components—which both Airbus and Boeing source from all over the world—could ultimately get relief from the tariffs. “The concern for us with new aircraft is parts are manufactured in multiple jurisdictions, whether it’s Boeing or Airbus,” Hajjar said. “We buy seats from Europe to get delivered to Boeing or put on an airplane that is getting exported. It’s a very complicated situation that we’re trying to figure out.” The aerospace industry relies on global industrial suppliers to manufacture aircraft and engines. “Because it takes a long time to get the supply base up and operating, you can’t just switch your supply base overnight,” StandardAero Chief Operating Officer Kim Ernzen said. And even with U.S.-European trade tensions appearing to ease, the rapidly escalating U.S.-China trade war is bad news for Boeing, which had just begun to deliver more aircraft to Chinese customers after a long slump during the 737 MAX and COVID-19 crises. Some industry leaders are questioning whether the company will deliver another airliner there in the foreseeable future. The upside, however, is that Boeing has markedly reduced its reliance on the Chinese market in recent years to minimize its exposure. According to the Aviation Week Network’s fleet forecast, 44 Boeing aircraft are due to be delivered to Chinese airlines this year. Most of them are 737-8s and -9s, but the company is also planning to hand over four 777Fs and three 787-9s to China in 2025. The carriers most affected by the Chinese government order are Xiamen Airlines (seven 737-8s), Air China (six 737-8s) and China Southern (six 737-8s). Boeing has earmarked 36 aircraft for delivery to the country in 2026. Neither the airlines nor the government have officially commented on the issue so far. The conflict could also affect China’s Comac C919, which is equipped with CFM International Leap-1C engines and has many U.S.-made components. Boeing has 130 aircraft remaining to be delivered to China and Hong Kong, based on its current unfilled order numbers. The vast majority are 737 MAXs, but Cathay Pacific has a sizable order in place for 21 777Xs. Okay Airways and Ruili Airlines have a total of 11 787-9s on order. China has not placed large orders for Boeing aircraft at some carriers, which explains the relatively small backlog for the country’s customers. However, Boeing’s 2024 Market Outlook forecasts that China will take delivery of 20% of all large commercial aircraft manufactured over the next 20 years. If the delivery stoppage lasts longer, Airbus is set to benefit. The company is forecast to deliver around 850 aircraft to Chinese operators in the next 10 years; 136 are to be handed over in 2025 and 148 are earmarked for 2026. Airbus plans to deliver about 820 aircraft globally this year. Airbus CEO Guillaume Faury told investors at the company’s annual general meeting April 15 that the manufacturer is still trying to assess the impact of possible U.S.-imposed tariffs and retaliatory tariffs on its business, and is weighing what the trade conflict might mean for future demand for aircraft as well as production plans this year and beyond. Faury said the environment for Airbus is “complex and fast-changing,” and he highlighted China’s decision to suspend Boeing deliveries to its airlines. The trade war is a “new risk” to Airbus, he said, and its dimension and speed remain to be assessed. Uncertainty over tariffs is also roiling a global aviation supply chain still struggling to regain its health after the COVID-19 downturn. “It’s not Boeing or Pratt & Whitney; it’s 10,000 individual suppliers, all of whom have different problems,” Tailwind Aviation Chairman and CEO Ray Sisson said at MRO Americas. “If all of a sudden you snap on these tariffs, it’s quite possible that . . . airlines are going to stop flying aircraft because they literally can’t afford them; they can’t afford the spare parts.” Trump’s abrupt 90-day “pause” of steep tariffs on nearly 90 countries, which had taken effect just hours before the start of MRO Americas—and escalation of those on China to 145%—served as a backdrop to the show, which drew more than 17,000 attendees and over 1,000 exhibitors to Atlanta. Uncertainty hovers over the aftermarket industry, which began the year with the wind at its back and affirmations of an ongoing business “super-cycle.” But many expressed concern, including William Ampofo, senior vice president for parts and distribution services and supply chain at Boeing Global Services. “Obviously, we’ve got some suppliers that are fighting force majeure or looking at surcharges and opportunities to pass those [costs] along, but it’s early stages,” Ampofo said. “I anticipate seeing more teardowns,” added Steven Roberts, managing director for materials and engine programs at JetBlue Airways. “They become more lucrative if you can eat your own fleet to get through [and] buy yourself some time” to sidestep tariffs on new parts. For companies doing teardowns: “Do we bring [the asset] into the U.S., or do we house it in a foreign country, and in which foreign country?” asked Peter Koodrin, vice president of sales at the Regional Airline Support Group. “Then there’s the devil in the details,” he noted, including whether a U.S.-manufactured part is exempt from tariffs when it returns to the U.S. for repair. MRO Holdings, which operates airframe maintenance facilities in El Salvador, Mexico and the U.S., is working to understand what lies ahead while keeping aircraft moving through its hangars. “We’re looking for transparency from our supply base, but we also want to provide transparency to the airlines,” CEO Greg Colgan said. “What do you do with tariff charges? Is it a line item? Is it put into the part price? I want as much transparency as possible, because when I get to the end of the fiscal quarter or the fiscal year, I want a specific number for what the impact is.” Similarly, Hong Kong Aircraft Engineering Co. (HAECO) described efforts to flush out information on the impact of tariffs vendor by vendor. A real concern is that aircraft checks could be delayed because parts are not available. “We have started to see a few holds at customs, which is definitely concerning,” HAECO Americas CEO Todd Navin said. Lufthansa Technik noted that while the effect of tariffs on global production networks is a concern, so are drivers of airline profitability, which could “start to affect the demand for our services,” explained David Doyle, vice president of corporate strategy at Lufthansa Technik. “We have already seen the first engine deferrals,” he added, citing an engine that was due to arrive for maintenance from a North American customer. “Nervous airlines are not a good thing for the MRO industry.” Financial analysts say that it all puts manufacturers in a bind. “Aftermarket companies risk demand destruction if they implement outsize price increases to cover tariff impacts while airlines are seeing soft bookings,” says Scott Mikus, vice president at Melius Research. “Boeing and Airbus need to keep their supply chains ramping but risk accumulating excess inventory if airlines defer new aircraft deliveries to save cash/avoid tariffs.” On the surface, the U.S. defense industry has minimal exposure to new tariffs on its imports, but it does have a unique vulnerability to retaliation by other countries. Much still must be determined to understand the effects. “The Defense Department may need more funding to cover higher costs of imported materials or components,” Capital Alpha Partners Managing Director Byron Callan notes. “Or the Defense Department could demand that contractors eat incremental costs if they don’t have contract clauses that enable adjustments for input cost changes.” The U.S. defense industry received 3.1% of global arms imports in 2020-24, ranking ninth in the world, according to the Stockholm International Peace Research Institute. By contrast, it dominated the global trade in weapons, providing 43% of exports over the same period. The next largest exporter, France, accounted for only 9.6%. Those overall numbers, however, mask risks around pricing of and access to specific materials required for some defense products. “Although the U.S. defense industry is largely self-sufficient in end-product manufacturing, it remains exposed to risks tied to critical raw material imports—such as gallium, yttrium and tantalum—which are vital for systems like fighter jets, helicopters, armored vehicles and precision munitions,” a Morningstar analyst notes in an April 7 research note. Certain U.S.-origin defense products have more diverse supply chains than ever. The Lockheed Martin F-35 epitomizes a decades-old trend to globalize the industry. Lockheed’s primary supplier for the aft fuselage is BAE Systems in the UK. Second-source options for the wings are based in Israel and Italy. Rheinmetall plans to open a facility in Germany next year to produce 400 center fuselages, backing up primary supplier Northrop Grumman. “We continue to closely review announcements regarding tariffs and are assessing potential impacts to our operations,” a Lockheed spokesperson tells Aviation Week. “We are collaborating with our suppliers to understand and mitigate any potential impacts, ensuring minimal disruption to our business and ability to deliver mission-critical solutions to our customers.” Beijing retaliated quickly with new controls on critical mineral exports, targeting the U.S. defense industrial base while matching levies on imports. China now requires special licenses for export to the U.S. of seven medium and heavy rare earth elements: dysprosium, gadolinium, lutetium, samarium, scandium, terbium and yttrium. China’s Commerce Ministry said in a statement that it imposed the export curbs “to better safeguard national security and interests and to fulfill international obligations such as nonproliferation.” Beijing calibrated its choice of minerals carefully. The U.S. is highly dependent on China for the metals and lacks the ability to produce them at scale domestically—even when there are significant domestic deposits. “This is a precision strike by China against Pentagon supply chains that enable our most powerful weapons and defense systems,” says Mark Smith, CEO of NioCorp, a company developing a critical minerals project in Nebraska. At the same time, Beijing is applying direct pressure to the defense sector’s permanent magnet supply chain. Terbium, for instance, adds temperature resiliency to neodymium iron boron magnets, which have crucial defense applications, including missile guidance and control, satellite communications and radar systems. Lockheed’s F-35 Lightning II fighter, General Atomics’ Predator drones and RTX’s Tomahawk missiles all use rare earth magnets. The magnets are also essential components of Virginia- and Columbia-class submarines. Terbium is one of the hardest rare earths to source, making up less than 1% of most deposits, according to the Pentagon. Because of its scarcity, extraction is costly. China produces nearly 100% of the world’s dysprosium. The element is used to strengthen neodymium magnets’ resistance to demagnetization at high temperatures. Dysprosium’s heat resistance makes it a crucial component of advanced semiconductors as well. By curbing gadolinium exports to the U.S., China is disrupting the aircraft engine supply chain. Gadolinium helps enhance the mechanical properties of alloys in turbine blades and other engine components. Rare earth supplier Stanford Advanced Materials notes that gadolinium may have additional applications in space exploration. “Its ability to absorb neutrons and gamma rays makes it an ideal material for protecting spacecraft and satellites from the harmful effects of cosmic radiation,” the company says in a research note. A week before Trump’s inauguration in January, Bastian told investors that Delta was “off to a great start” and “on track to deliver the best financial year in our history.” Soon factors including a fatal midair collision at Ronald Reagan Washington National Airport, severe weather and economic uncertainty prompted the airline and fellow majors to revise their first-quarter expectations. On April 9—the day Trump’s initial tariffs took effect, before being quickly reduced—Delta pulled its full-year guidance for 2025. Bastian, citing “broad economic uncertainty around global trade,” told investors that growth had largely stalled, most prominently in the carrier’s domestic main cabin and softening consumer and corporate travel. “The airline sector is in the eye of the storm,” TD Cowen analyst Thomas Fitzgerald observed. The initial reciprocal tariffs started at 10% and escalated to 20% for goods from the European Union, 24% from Japan, 26% from India, 32% from Taiwan and 46% from Vietnam. “I don’t know where it ends, and I think no one does, really,” Sun Country CEO Jude Bricker said at CAPA Americas. Canadian airlines have been adjusting their capacity since tariff threats from the U.S. emerged this year. Air Canada said midmarket transborder bookings are down roughly 10% year over year for the next six months. Porter Airlines has trimmed some U.S. frequencies and redeployed that capacity into the Canadian domestic market. “The billion-dollar question is whether this is something that will continue for the next 3-4 years, or emotions will cool down and the summer of 2026 will be more or less back to normal,” said Maciej Wilk, CEO of Canadian ultra-low-cost carrier Flair Airlines. Sisson at Tailwind Aviation expressed sympathy for airline CEOs. “I don’t have the faintest idea how I would run an airline, not knowing what my supply of parts is, what my cost of fuel is, what my availability of aircraft is, and then costing it out over a three-year period,” he said. “It’s so profoundly complex.” Amid the chaos, air cargo operators that rely heavily on e-commerce shipments to drive growth are closely scrutinizing one seemingly small change and fearing the worst. As part of Trump’s sweeping tariff announcements on what the president dubbed “liberation day,” the White House confirmed that the “de minimis” exemption that allowed low-value shipments from China to enter the U.S. tariff-free would end May 2. “The so-called liberation day turned out more like castration day, as the tariffs and policies adopted seek to disable or neuter global trade mechanisms,” International Air Cargo Association Director General Glyn Hughes said. Demand for air cargo rose a record 11.3% in 2024, fueled by strong e-commerce and ocean shipping restrictions, according to the International Air Transport Association. But it dropped 0.1% in February, the first decline since mid-2023. Niall van de Wouw, chief air freight officer at Norwegian cargo specialist Xeneta, described the U.S. tariffs announced April 2 as a “seismic shock” for e-commerce in a company press release the next day. “In my 30 years working in the air freight industry, I cannot remember any other unilateral trade policy decision with the potential to have such a profound impact on the market at a global level,” van de Wouw said. “E-commerce has been the main driver behind air cargo demand. . . . No one is benefiting from this situation because it’s impossible to plan effectively against a moving target.” Trump’s tariffs and other new policies—such as Defense Department changes and actions by the Elon Musk-led so-called Department of Government Efficiency—are expected to dominate the quarterly earnings briefings that start in late April. Until then, companies have allowed trade associations to do the talking, not wanting to risk angering Trump and becoming a target. “The 10% tariff introduction—on top of our existing levies—is disappointing but will not kill our sectors,” says Kevin Craven, CEO of the ADS trade association for UK aerospace, defense, security and space, which represents almost 1,500 businesses. “It is in the small, not catastrophic, category. Our members report additional costs of tens of millions of pounds, which is, sadly, better than we anticipated. Such levels distort the cost of goods and raw materials—perhaps irrevocably.” Suppliers were stressing about the effect of tariffs in February, when they were still a seemingly distant outcome, and lower-tier companies were expected to take the brunt of related cost spikes because they make new parts that travel up the supply chain to Tier 1 and OEM customers (AW&ST Feb. 24-March 9, p. 22). By April, aerospace manufacturing was in a collective funk about the changes in business conditions, which are unlikely to lead to much except even higher costs. AeroDynamic Advisory Managing Director Kevin Michaels, a supply chain specialist, said on the April 3 Aviation Week Check 6 podcast that the U.S. enjoys a $114 billion trade surplus with the rest of the world in aerospace. “That has worked so well and created so many high-paying jobs in our economy,” Michaels said. “Something that is lost on much of the public—certainly in America—is most manufacturing jobs have been lost to automation, not to free trade,” he added. “It is true that some labor-intensive jobs have gone to Mexico and other places. But the reason many companies are in Mexico today isn’t because of cost savings; it’s because they can find labor there. It’s very hard to find labor in this country right now with a 4% unemployment rate.” “Tariffs are definitely a big red,” Gary Weissel, managing officer at Tronos Aviation Consulting and an interiors market expert, said on a Bloomberg Intelligence webinar March 24. “We’re already seeing that, and we’re already seeing tariffs becoming a big concern in the interiors industry, hampering deliveries.” Weissel said that U.S. Customs and Border Protection has stopped inbound aviation shipments and struggled with applying tariffs that involve determining U.S. content as well as quantity and origin of aluminum. “Multiple major suppliers have set up war rooms to try to analyze and plan to deal with tariff issues,” Weissel said. In turn, they are warning their suppliers that price renegotiations could be coming. “We are really starting to see that real world starting to happen,” he said. 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 as the customers of subtier suppliers, they call the shots and can rely on their enormous financial resources to muddle through. Also mitigating the near-term effects at the top are the facts that most of Boeing’s supply chain is U.S.-based; Airbus has a final assembly line for narrowbodies in Mobile, Alabama; and 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 tariff effects really would start to bite in new parts from lower-tier suppliers, in part because altering 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 1-2 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 that builds 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, said Alex Krutz, a manufacturing consultant with Patriot Industrial Partners. Krutz recently accepted an appointment as deputy assistant secretary of manufacturing for the International Trade Administration at the U.S. Commerce Department. Of course, much depends on how long the U.S.-China trade war and tariffs last. There is a nonzero chance that it could all be resolved soon enough that systemic damage does not occur and international aerospace and defense trade is not permanently penalized. Or maybe it will get worse. Kraven of ADS says: “Now we wait.”

factory

17 April 2025

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25% Tariffs Coming For All Imported Cars In April: Dc Watch

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