Trump’s tariffs set potential “nightmare” scenarios for aircraft manufacturing
Boeing sources around 700 suppliers around the world, supporting the bestselling 737 aircraft, each of which consists of approximately 2 million parts. (Photo: Boeing)
As the global supply chain prepares to tackle new and pressing US tariffs, one analyst says how the increased costs will affect aircraft manufacturing, and which portion will be most affected We are reviewing the impact of this.
Manufacturers are somewhat nervous following this week’s tariff talk, according to Philip Garry, chief strategy officer and co-founder of the Supply Chain Execution Platform. Cofactor.
President Donald Trump on Saturday I signed an executive order It imposes a 25% tariff on imports from Mexico and Canada, and a 10% tariff on goods from China.
You can find detailed breakdowns of products that may be affected by customs duties here.
Following their respective agreements, Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau each have pledged to send around 10,000 service members to police the US border.
It is currently unclear whether these tariffs will continue to be used as negotiating tools for international policy changes coming in March, or whether they will be implemented as planned.
However, tariffs on China came into effect on Tuesday. Analysts and stakeholders seem mostly in standby mode, as tariffs fully impact America’s third largest trading partner, which has not yet been seen, but there are some suggestions. Tariffs can cause a shift in the global supply chain.
Import duties have a wide range of impact on a wide range of goods and their components. Aircraft builders are known to source a wide range of materials and products from around the world through complex, interconnected supply chains.
a 2024 Parliamentary Report The US Government’s Accountability Office (GAO) reviewed the supply chain challenges faced by commercial aviation manufacturers.
“Thousands of manufacturers and raw material suppliers make up the global aviation manufacturing supply chain,” the report said. “The United States is a net exporter of aerospace products, and most of the US imports of aviation products come from five countries: France, Canada, Japan, Germany and the UK.”
The 45-page report outlined that American airline manufacturer Boeing is sourcing around 700 suppliers to support around 700 aircraft.
“Of the 17 17 (airline component) manufacturers we spoke about, 15 (airline component) manufacturers said they or their suppliers had an impact on their ability to meet demand in the sourcing of raw materials or components,” he said. The report states. “These manufacturers have reported shortages or delays in the acquisition of a wide range of items, from castings and forgings to engines and semiconductors…”
flying I spoke with Gulley. Gulley analyzed how tariffs affect the supply chains of manufacturers who build everything from rocket ships and satellites to drones and autonomous vehicles for the key components affected. “Now, things are very fluid,” Garry said. “I think this is one of the things that really bothers me. And when we explain the temperature of the room conversations that our team members have at Prime, it’s either a defense or a commercial prime maker. Even if that’s the case, it holds your breath in a lot of waiting times.”
Defence contractors in particular have already diversified their direct supply chains “as long as they can move them away from China,” but Gully said the idea that Canada and Mexico could be brought to the trade war with the US was “a bit of a loss.” It said it could mean a “expensive” process. change.
“…You’ve been watching for decades of relationships between moving materials that move materials in a very friendly way,” he said. “And all sorts of shifts that hinder that relationship – and the possibility that tariffs can be complicated when moving those materials between facilities or through layered manufacturing processes, processes (all across borders) Will it change by simply moving it?”
He added that tariffs ultimately cause an increase in manufacturing costs, especially in coastal environments.
However, if the aircraft’s manufacturing could actually be damaged, it includes customs duties on imported electronic components.
“If you look at planes that are commercial airlines, you’ll probably find that 20-30% of the cost will actually be electronics,” Gully said. “Because there are so many systems out there. …I can’t talk about a lot of customers in particular, but in a tiered supplier relationship, if you look at the customer’s materials, you’ll probably be a third (because) You can see the ingredients, the country of origin, is still in China.”
He said the tariffs will have a “major impact” on a third of the supply of tiered electronics, which falls around a third of the cost of the plane.
“It’s 10% and value of the materials through all tiered suppliers,” Gully said. “That’s just a huge impact there. That means there’s at least one digit increase in the absolute cost of the plane alone.”
In the other two potential tariffs, Gulley said that subassembly manufacturers of major components, such as the Rolls-Royce engine, are in Canada and can see premiums on imported products.
“And you have the same ice protection system, the landing gear system (and) with environmental control,” he said. “You can see these supply chains entering Airbus and Boeing, and those tons have manufacturing facilities in China, Mexico and other countries.”
Although the direct consequences of the enacted tariffs have yet to be seen, Gurley highlighted some of the big questions for manufacturers remaining in the air.
“If you’re purchasing subassemblies from (a facility in the customs country), are those facilities open?” he said. “Is there the same demand? Does the tariff mean that the manufacturing industry must be returned to land?
And there is the threat of possible retaliatory tariffs, which could shake things up even more.
“I don’t know what these retaliatory moves will be,” Gurley said. “So people are holding their breath knowing that either process changes or supply chain manufacturing facilities must change. And we don’t even know what it is. There’s a huge cost. …I have this nightmare and things are still fluid and too much to even act.”
