Aerospace industry bracing for $5 billion loss from looming tariffs

In early March 2025, the United States announced a series of 25% tariffs on goods entering from Mexico and Canada, significantly impacting the aerospace sector. This decision came shortly after similar tariffs on aluminum and steel were imposed on March 12, which are critical for aircraft structures and engines. Boeing, as the leading U.S. exporter, is particularly affected, with estimates indicating that losses could reach up to $5 billion. However, industry executives express concerns that the tariffs may alter or be delayed, resulting in confusion and a cautious approach to investments and supply chain adjustments. The aerospace supply chain is intricate and facing difficulties due to its inherent complexity. Components often cross borders multiple times before final assembly, making the industry vulnerable to trade disruptions. Additionally, regulatory constraints mean that the supply chain cannot easily adapt to geographic changes, often forcing companies to absorb heightened costs. Surveys of executives reveal trade uncertainty is currently a greater concern than political or macroeconomic uncertainties, which complicates their operational planning as they wait to see how the tariff situation unfolds. A troubling statistic from the aerospace sector indicates that between 2,000 and 3,000 aircraft units remain unproduced due to these ongoing challenges. On top of this, a recent fire destroyed a 600,000-square-foot facility owned by SPS Technologies that produced specialized fasteners, exacerbating supply chain disruptions further. Many of the components manufactured there were sole source parts, and establishing new sources could take years due to the lengthy qualification process involved. Overall, industry leaders worry about the long-term stability of their operations, as they assess that it could take two to four years for the supply chain to stabilize entirely. Boeing's production has also been severely impacted by previous external shocks, such as the MAX accidents, leading to significant reductions in aircraft output and still struggling to reach necessary cash-positive production levels. This scenario underscores the critical need for a stable trade environment to ensure the industry's ongoing viability and restore confidence among stakeholders.