Costs seen as having heavy impact on aerospace and airline industries

The imposition of sweeping tariffs by the Trump administration marks a “profound turning point” in international trade, according to an article in Gulf News that was included in the Daily News Brief from GBTA.

Notably, said the article, these tariffs dismantle the 45-year tariff-free status enjoyed by the global aerospace industry under the WTO’s Agreement on Trade in Civil Aircraft. This shift will significantly reshape how aviation companies operate, compete and strategize.

Boeing and Airbus face direct and immediate impacts, said the article. Boeing, the US’ leading exporter, is uniquely vulnerable due to the retaliatory tariffs from China — its single largest market forecasted to require nearly 9,000 new aircraft in the next two decades. China’s reciprocal tariff of 34% on US imports could severely reduce Boeing’s competitiveness, potentially handing market share to European rival Airbus, said the article.

Airbus, despite potentially benefiting from Boeing’s challenges in China, confronts its own troubles in the US, according to the article. The newly implemented 20% US tariff on European aerospace imports threatens Airbus’s ability to compete effectively for orders from major US carriers such as Delta Air Lines and United Airlines.

The airline sector faces direct cost increases and operational uncertainty. Investors, said the article, are signaling concern about escalating capital expenditure on new aircraft and maintenance components, exacerbated by anticipated increases in fuel and supply chain costs.

Global airlines reliant on transatlantic and transpacific routes will also face intensified pressure, according to the article. Lufthansa and Air France-KLM, for instance, already anticipate reduced passenger volumes resulting from higher operational costs and increased airfare pricing. Reduced international demand, especially for discretionary leisure travel, could further amplify the impact, potentially creating longer-term revenue declines across the sector.

The coming months, said the article, “will serve as a critical test of agility and strategic foresight, determining the winners and losers in this dramatically altered global market.”