President Donald Trump’s trade war could become a major problem for Boeing (BA+1.01%), and give European rival Airbus (AIR+0.40%) a leg up on the competition.
“In an absolute worst case scenario, say, a 25% increase across the board on tariffs, a tit-for-tat from both sides — a Boeing 787, the price will go up by $40 million,” AerCap (AER+1.53%) CEO Aengus Kelly told CNBC’s Squawk Box on Wednesday. “No one’s going to want to pay that.”
AerCap, the world’s largest aircraft leasing company, which purchased 150 aircraft, helicopters, and engines in 2024, would be significantly affected by any price increases in aircraft.
The U.S. has issued 25% tariffs on Canada and Mexico, 20% tariffs on China, and 25% tariffs on foreign aluminum and steel since Trump took office. More duties are scheduled to land on the president’s desk as soon as April 2.
Boeing is one of the top 10 manufacturers in Mexico and spends up to $1 billion in the nation through its supply chain, according to a company fact sheet. It spends more than $500 million in Mexico each year on commercial airplane parts.
Boeing CEO Kelly Ortberg told staff last week that Trump’s tariffs would raise costs on parts like landing gear that are imported from Canada, Bloomberg News reported. Boeing has a division based in Winnipeg that makes more than 500 parts and assemblies for its commercial unit. Boeing Winnipeg is also a “tier 1″ partner on the 787 Dreamliner program, which is assembled in South Carolina.
Tariffs could also create a “continuity of supply issue,” Ortberg said. Boeing’s complex aircraft are made up of thousands of parts and are subject to demanding specifications. Aerospace expert Jerrold Lundquist recently noted that a Boeing 737 has around 2,000 parts sourced from 700 suppliers.
“That’s really, really expensive for us — if we’re building our products and we don’t have the supply chain components,” he added, according to Bloomberg.
Trump’s 25% tariffs on steel and aluminum prompted retaliation from Europe, which announced duties on $28 billion worth of goods ranging from peanut butter to metals. The president has also discussed 25% tariffs on imports from the European Union, which could prompt further rebuttals.
That would result in Boeing’s aircraft becoming even more expensive in key European markets. The company’s commercial market outlook through 2043 expects Eurasia to account for 22% of global deliveries. Boeing currently works with airlines and governments in 150 countries.
Boeing does not make any parts in the E.U., although it does have a manufacturing plant in the United Kingdom, which produces components for its 737 line. Keir Starmer, the U.K.’s prime minister, said Wednesday that the nation will “keep all options on the table” to respond to Trump’s tariffs.
Airbus, comparatively, has some protection against U.S. tariffs. The French-based company has facilities in Alabama, Mississippi, and Florida, and works with more than 2,000 suppliers across more than 40 states.
CEO Guillaume Faury told CNBC last month that the company may prioritize deliveries to non-U.S. customers if tariffs disrupt its operations. Several U.S. carriers buy aircraft from Airbus, including Delta Air Lines (DAL-4.22%) and JetBlue Airways (JBLU-4.44%).
Kelly, the AerCap CEO, told CNBC (CMCSA-2.75%) that his worst case scenario would see most airlines turn to Airbus for their new aircraft. Boeing would dominate the U.S., but Airbus would control between 75% and 80% of the global market. But, Kelly cautioned, it’s still too early to fully grasp the impact of the tariffs.
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