This article first appears on FlyingMag.com.
As global supply chains prepare to deal with new and imminent U.S. tariffs, an analyst is reviewing how the cost increase will impact aircraft manufacturing and which parts may be most affected.
Phillip Gulley, chief strategy officer and co-founder of supply chain execution platform Cofactr, said manufacturers were a little nervous after talks about tariffs this week.
On Saturday, President Donald Trump signed an executive order to impose a 25% tariff on imports from Mexico and Canada and 10% tariff on Chinese goods.
A detailed breakdown of which items may affect which ones can be found here.
Although initially believed the tariffs were in effect on Tuesday, leaders from Mexico and Canada met with Trump on Monday and reached a deal to offset tariffs on state imports, reducing them for another month.
According to Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau
It is unclear whether these tariffs will continue to be used as a negotiating tool for international policy changes in March or whether they will be implemented as planned.
However, tariffs on China do take effect from Tuesday. Analysts and stakeholders mostly appear to be in a mode to be seen due to the full impact of tariffs on the U.S.’s third largest trading partner, although some believe tariffs could lead to changes in global supply chains.
Import duties have had a wide impact on a variety of commodities and their components. It is well known that aircraft builders will source a wide range of materials and products from all over the world with complex, interconnected supply chains.
The 2024 Congressional Report by the U.S. Government Accountability Agency (GAO) reviews supply chain challenges faced by commercial aviation manufacturers.
"Thousands of manufacturers and raw material suppliers make up the global aerospace manufacturing supply chain," the report said. "The United States is a net exporter of aerospace products, with most American aerospace products importing from five countries: France, Canada, Japan, Germany and the United Kingdom.”
The 45-page report outlines American aviation maker Boeing has about 700 suppliers to support its 737 aircraft, which consist of about 2 million individual parts.
"Five of the 17 (aerospace component) manufacturers we spoke with showed that their or their suppliers' difficulties in sourcing raw materials or components affected their ability to meet their needs," the report said. "These manufacturers are The report says there are shortages or delays in the range from castings and questions to engines and semiconductors, and so on…”
flight Talked with Gulley, who analyzed how tariffs impacted the supply chain of manufacturers, who built everything from rocket ships and satellites to drones and autonomous vehicles, all of which were affected.
“At the moment, things are getting super changing,” Guli said. "I think it's one of the really disturbing things. And if I were to explain the temperature of conversations our team members had with prime numbers (whether it's defense or commercial major manufacturers), it would be a lot of waiting and holding on. breathe."
While defense contractors have in particular diversified their direct supply chains “as far as possible from China”, Gilly said the idea that Canada and Mexico might also have a trade war with the United States could mean a “ridiculous” Expensive” process changes.
“…You’re looking at decades of cross-border material relationships in a very friendly way,” he said. “And any kind of shift that suppresses that relationship, and moving these between facilities or through layered manufacturing processes. The potential for complex tariffs when it comes to materials - will the process change beyond cost (just moving things on the border)? Transparent
He added that tariffs will ultimately lead to increased manufacturing costs, especially in nearshore environments.
However, where aircraft manufacturing may end up being hurt involves tariffs on imported electronic components.
"If you look at an airplane, a commercial airline, it might actually be 20% to 30% of electronics," Geely said. "Because there are a lot of systems out there. … I can't talk about a lot of customers in particular, but I can do it in the segment The supplier relationship of the layer tells you that if I look at the materials of our customers, it may (for) their materials, and the country of origin is still China.”
He said tariffs would have a "huge impact" on one-third of electronic products, about one-third of aircraft costs
"It's 10% of the material and the value," Geely said. "That happens to be a huge impact there. …This means you may have at least one number that adds the absolute cost of the plane. ”
On two other potential tariffs, Gurley said that like the Rolls-Royce engines, subcomponent manufacturers for key components are in Canada and can see a premium on imports.
"You then have the same situation with environmental controls for ice protection systems, landing gear systems (and),” he said. "You can look at these supply chains that go into Airbus and Boeing, a large number of them in China, Mexico and other countries. There are manufacturing facilities.”
Although the direct results of the enacted tariffs have not been seen yet, Gulley highlighted some of the big issues with some manufacturers hanging in the air.
“If you have been buying subcomponents from facilities (located in countries subject to tariffs), are these facilities open?” he said. “Is there the same demand? Does the tariff mean you have to move that manufacturing back shore?
Then there is a possible threat of retaliatory tariffs, which could be further shocked.
"We don't know what those retaliatory moves will be," Geely said. "So people know that process changes or supply chain manufacturing facilities will have to be transferred. And we don't even know what that is. So, this huge amount of money Cost. … There is this nightmare and there are still too many things to even take action.”
Trump’s tariffs set a potential “nightmare” scenario for aircraft manufacturing, first appearing in cargo space.