The 90-day tariff pause gives the global economy, which was already feeling the pressure from the escalating trade tensions, a temporary relief. However, the situation with China is different. President Donald Trump offers no respite and has increased tariffs on Chinese exports to the U.S. Given this new landscape, an important question arises: Which sectors are most affected?
In the tech sector, Apple has taken action to mitigate the tariffs’ impact by shipping thousands of iPhones from India to the U.S. Additionally, Trump’s trade war might lead to price increases for the device in some markets.
Another key player in the current landscape is Boeing. It’s faced significant challenges in recent years, particularly due to two Boeing 737 Max 8 crashes. However, Boeing remains a prominent industrial leader in the U.S. As a heavyweight in the aerospace sector, its aircraft are crucial for global transportation and serve as a testament to the country’s technological and economic prowess.
However, the ongoing trade war threatens to undermine some of Boeing’s competitiveness and may offer an advantage to its major European rival, Airbus.
To better understand the current situation, we need to take a look at the tariffs imposed by the U.S. and China since Trump’s return to office:
U.S. Tariffs on Chinese Products
- Feb. 1, 2025: 10% tariffs imposed to address “the flow of contraband drugs like fentanyl to the United States.”
- March 3, 2025: 10% tariff for China’s inaction to “blunt the sustained influx of synthetic opioids.”
- April 2, 2025: 34% “reciprocal tariffs” are imposed.
- April 8, 2025: Additional 50% as retaliatory tariffs.
- April 9, 2025: Additional 41% as retaliatory tariffs.
The total amounts to 145% on imports from China.
Notably, additional tariffs have been imposed over time:
- July 10, 2018 (during Trump’s first term): A 25% tariff on certain products in response to “unfair Chinese practices.”
- Feb. 11, 2025: 25% tariffs on all steel and aluminum imports (this goes beyond China).
Chinese Tariffs on U.S. Products
- April 4, 2025: 34% tariffs in response to U.S. “reciprocal tariffs” on all imported U.S. goods.
- April 8, 2025: 50% tariffs in response to increased U.S. “reciprocal tariffs” on all imported U.S. goods.
The total amounts to an 84% tariff on U.S. products.
Tariffs Will Increase Aircraft Manufacturing Costs
The tariffs could have a substantial impact on supply chains in the aviation industry. While the majority of Boeing’s production takes place in the U.S., many components and materials it relies on come from suppliers around the globe.
For instance, Chinese companies like Shandong Nanshan Aluminum supply aluminum to aerospace entities. One example is Spirit AeroSystems, which is based in Wichita, Kansas, and produces fuselage sections for both Airbus and Boeing. In fact, it manufactures more than 70% of the Boeing 737 airframe. In this context, tariffs could lead to an increase in the cost of aluminum imported from China.
Both Boeing and Airbus started diversifying their supply chains following the initial tariff disputes during Trump’s first term. However, recent analyses and official public documents indicate that Chinese aluminum is still used in the manufacturing of certain parts. This raises the possibility of price hikes.
The situation with Airbus illustrates how interconnected supply chains can be. Spirit AeroSystems not only partners with Boeing but also works with its major European competitor. Additionally, Boeing imports high-tech components produced in Sheffield in the United Kingdom, further highlighting the complexity of international supply relationships.
Airbus’ Tactical Advantage
From a supply chain perspective, the manufacturer most reliant on raw materials and components impacted by tariffs will likely face the greatest disadvantage. Determining which of the two major manufacturers is at a higher risk based on available data isn’t easy. However, aluminum can serve as a reference point. The manufacturer that successfully imports aluminum at the best price and with the lowest tariff burden will gain a competitive edge.
Changing suppliers involves logistical and operational adjustments, and the global context is so volatile that making structural decisions is difficult. China isn’t the only nation that faces tariffs. Many countries are still subject to a 10% base levy, despite the White House granting a 90-day extension on the strictest tariffs.
Where does Airbus’ alleged advantage lie? Reuters reports that the European manufacturer could benefit in the Chinese market due to the absence of the 84% tariffs imposed on U.S. aircraft. Although China promotes its own models, like the Comac C919, it remains one of the world’s largest buyers of aircraft. Both Airbus and Boeing have pending deliveries.
Chinese airlines may turn to Airbus if its planes are offered at lower prices than Boeing. Boeing could attempt to mitigate some of the impact by reducing its profit margins. However, the current tariffs and the possibility of future increases make that strategy unsustainable. Meanwhile, Airbus could face a significant challenge in scaling up its production capacity and meeting delivery deadlines.
Images | Daniel Eledut | Sven Piper | Lukas Souza
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