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Aerospace Firms Scour Contracts Over Tariffs After Supplier Challenge

Harrison BrooksMonday, Apr 7, 2025 5:20 pm ET
2min read

The aerospace industry, a global network of suppliers, manufacturers, and airlines, is grappling with a new challenge: tariffs. The recent declaration by U.S. supplier Howmet Aerospace of a "force majeure event" due to U.S. President Donald Trump's tariffs has sparked a debate over who should bear the cost of these trade disruptions. This move by Howmet, which makes engine parts, fuselage fasteners, and other critical components, has sent shockwaves through the industry, forcing companies to scour their contracts to determine their exposure to these tariffs.



The aerospace supply chain is a delicate web of interdependencies, where a single missing component can halt production. As Jefferies analyst Sheila Kahyaoglu noted, "Howmet has made a chess move, declaring force majeure and threatening to halt shipments. We all know it takes just one nut or bolt to stop the ... supply chain.โ€ This threat underscores the leverage that suppliers hold in this industry, where the cost of disruption can be astronomical.

The tariffs, which include a 20% levy on European Union products such as Airbus planes, are expected to put significant pressure on the industry. The potential for EU retaliation against U.S.-based Boeing adds another layer of complexity. The industry has broadly operated under a 1979 treaty on zero-duty trading in aerospace, but this treaty does not include Mexico, a key player in the supply chain.

The impact of these tariffs is not just financial; it is also operational. The industry is already facing supply chain inefficiencies, workforce disruptions, and inflationary pressures. The tariffs could exacerbate these issues, leading to further delays and increased costs. As Bertrand Grabowski, an aviation adviser, noted, "By definition, aviation is a global market for both buyers and sellers. When you introduce friction like this for such large sums of money, you have instant chaos, not only for airplanes but also for engines and multiple spares from avionics to seats."

The industry is now at a crossroads. Planemakers like Airbus and Boeing hold significant leverage over suppliers, as they control access to next-generation aircraft programs. This leverage could be used to negotiate tariff costs in exchange for participation in these programs. However, this also means that suppliers may have to balance short-term tariff disputes with long-term access to high-value contracts.

The financial and operational risks for aerospace firms are significant. Absorbing tariff costs could lead to margin erosion, cash flow strain, and supply chain disruptions. Firms may be forced to divert funds from production scaling to cover these costs, worsening delays and backlogs. The Airbus A321XLR assembly, for example, could face delays if key components are tariff-affected.

In response to these challenges, firms are likely to prioritize investments in supply chain resiliency and technology-driven cost optimization. Deloitteโ€™s 2025 outlook stresses that firms are prioritizing "resiliency and visibility" in supply chains. This could involve nearshoring or reshoring production, diversifying suppliers, and adopting AI and digital tools to enhance efficiency.

The industry is also likely to see a shift in investment strategies. Firms may pivot investments toward defense contracts, which have steadier funding, away from commercial sectors burdened by tariffs. However, this could also mean delayed innovation and R&D, as cash is diverted to cover tariff costs.

The aerospace industry is at a critical juncture. The tariff disputes are forcing firms to restructure partnerships, diversify supply chains, and accelerate technological innovation. The outcome will likely reshape global aerospace collaboration, with companies prioritizing self-sufficiency and adaptive strategies over traditional reliance on transatlantic partnerships. The industry must navigate these challenges with a keen eye on both short-term costs and long-term strategic investments.
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Intelligent-Snow-930
04/07
$BA Bibi leading the way... lots of defense will be needed... and probably some planes too
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04/07

๐™ธ ๐š‘๐š˜๐š™๐šŽ ๐šข๐š˜๐šžโ€™๐š›๐šŽ ๐š๐š˜๐š’๐š—๐š ๐š ๐šŽ๐š•๐š•. ๐™ธ ๐š ๐šŠ๐š—๐š๐šŽ๐š ๐š๐š˜ ๐š™๐šŽ๐š›๐šœ๐š˜๐š—๐šŠ๐š•๐š•๐šข ๐š›๐šŽ๐šŠ๐šŒ๐š‘ ๐š˜๐šž๐š ๐š‹๐šŽ๐šŒ๐šŠ๐šž๐šœ๐šŽ ๐š ๐šŽโ€™๐š›๐šŽ ๐šŒ๐šž๐š›๐š›๐šŽ๐š—๐š๐š•๐šข ๐š ๐š’๐š๐š—๐šŽ๐šœ๐šœ๐š’๐š—๐š ๐šŠ ๐š™๐š’๐šŸ๐š˜๐š๐šŠ๐š• ๐š–๐š˜๐š–๐šŽ๐š—๐š ๐š’๐š— ๐š๐š‘๐šŽ ๐šŒ๐š›๐šข๐š™๐š๐š˜ ๐š–๐šŠ๐š›๐š”๐šŽ๐š ๐š๐š‘๐šŠ๐š ๐šข๐š˜๐šž ๐šœ๐š’๐š–๐š™๐š•๐šข ๐šŒ๐šŠ๐š—โ€™๐š ๐šŠ๐š๐š๐š˜๐š›๐š ๐š๐š˜ ๐š–๐š’๐šœ๐šœ. ๐™ฑ๐š’๐š๐šŒ๐š˜๐š’๐š— ๐š’๐šœ ๐šŒ๐šž๐š›๐š›๐šŽ๐š—๐š๐š•๐šข ๐šœ๐š’๐š๐š๐š’๐š—๐š ๐šŠ๐š 75๐š”, ๐šŠ๐š—๐š ๐šŠ๐š•๐š• ๐šœ๐š’๐š๐š—๐šœ ๐š™๐š˜๐š’๐š—๐š ๐š๐š˜ ๐šŠ ๐šœ๐š๐š›๐š˜๐š—๐š ๐šŒ๐š•๐š’๐š–๐š‹โ€”๐š™๐š˜๐š๐šŽ๐š—๐š๐š’๐šŠ๐š•๐š•๐šข ๐š๐š˜ 100๐š” ๐š˜๐š› ๐šŽ๐šŸ๐šŽ๐š— 150๐š” ๐š’๐š— ๐š๐š‘๐šŽ ๐š—๐šŽ๐šŠ๐š› ๐š๐šž๐š๐šž๐š›๐šŽ.


๐šƒ๐š‘๐š’๐šœ ๐š’๐šœ ๐šŽ๐šก๐šŠ๐šŒ๐š๐š•๐šข ๐š๐š‘๐šŽ ๐š”๐š’๐š—๐š ๐š˜๐š ๐š–๐š˜๐š–๐šŽ๐š—๐š ๐šœ๐š–๐šŠ๐š›๐š ๐š’๐š—๐šŸ๐šŽ๐šœ๐š๐š˜๐š›๐šœ ๐š ๐šŠ๐š’๐š ๐š๐š˜๐š›.


๐š„๐š—๐š•๐š’๐š”๐šŽ ๐š๐š›๐šŠ๐š๐š’๐š๐š’๐š˜๐š—๐šŠ๐š• ๐šœ๐š๐š˜๐šŒ๐š”๐šœ, ๐š ๐š‘๐š’๐šŒ๐š‘ ๐šŒ๐šž๐š›๐š›๐šŽ๐š—๐š๐š•๐šข ๐š˜๐š๐š๐šŽ๐š› ๐š–๐š’๐š—๐š’๐š–๐šŠ๐š• ๐š›๐šŽ๐š๐šž๐š›๐š—๐šœ ๐šž๐š—๐š•๐šŽ๐šœ๐šœ ๐šข๐š˜๐šžโ€™๐š›๐šŽ ๐š’๐š—๐šŸ๐šŽ๐šœ๐š๐š’๐š—๐š ๐š•๐šŠ๐š›๐š๐šŽ ๐šœ๐šž๐š–๐šœ, ๐šŒ๐š›๐šข๐š™๐š๐š˜๐šŒ๐šž๐š›๐š›๐šŽ๐š—๐šŒ๐šข ๐š˜๐š๐š๐šŽ๐š›๐šœ ๐š‘๐š’๐š๐š‘-๐šข๐š’๐šŽ๐š•๐š ๐š˜๐š™๐š™๐š˜๐š›๐š๐šž๐š—๐š’๐š๐š’๐šŽ๐šœโ€”๐šŽ๐šœ๐š™๐šŽ๐šŒ๐š’๐šŠ๐š•๐š•๐šข ๐š ๐š‘๐šŽ๐š— ๐šข๐š˜๐šžโ€™๐š›๐šŽ ๐š ๐š˜๐š›๐š”๐š’๐š—๐š ๐š ๐š’๐š๐š‘ ๐š๐š‘๐šŽ ๐š›๐š’๐š๐š‘๐š ๐š๐šž๐š’๐š๐šŠ๐š—๐šŒ๐šŽ ๐šŠ๐š—๐š ๐š๐š˜๐š˜๐š•๐šœ. ๐šƒ๐š‘๐šŽ ๐š–๐šŠ๐š›๐š”๐šŽ๐š ๐š’๐šœ ๐šŠ๐šŒ๐š๐š’๐šŸ๐šŽ, ๐š๐š‘๐šŽ ๐š–๐š˜๐š–๐šŽ๐š—๐š๐šž๐š– ๐š’๐šœ ๐šœ๐š๐š›๐š˜๐š—๐š, ๐šŠ๐š—๐š ๐š๐š‘๐š’๐šœ ๐š’๐šœ ๐šข๐š˜๐šž๐š› ๐šŒ๐š‘๐šŠ๐š—๐šŒ๐šŽ ๐š๐š˜ ๐š๐šŠ๐š”๐šŽ ๐šŠ ๐š›๐šŽ๐šŠ๐š• ๐š™๐š˜๐šœ๐š’๐š๐š’๐š˜๐š— ๐š‹๐šŽ๐š๐š˜๐š›๐šŽ ๐š๐š‘๐šŽ ๐š—๐šŽ๐šก๐š ๐šœ๐šž๐š›๐š๐šŽ.


๐šˆ๐š˜๐šžโ€™๐š›๐šŽ ๐š—๐š˜๐š ๐š๐š˜๐š’๐š—๐š ๐š๐š‘๐š’๐šœ ๐šŠ๐š•๐š˜๐š—๐šŽ. ๐™ธ ๐š ๐š˜๐š›๐š” ๐šŒ๐š•๐š˜๐šœ๐šŽ๐š•๐šข ๐š ๐š’๐š๐š‘ ๐šŠ ๐š‘๐š’๐š๐š‘๐š•๐šข ๐š›๐šŽ๐š™๐šž๐š๐šŠ๐š‹๐š•๐šŽ ๐šŽ๐šก๐š™๐šŽ๐š›๐š, ๐™ฒแด€แด›สœแด‡ส€ษชษดแด‡ ๐™ด. ๐šแดœ๐šœ๐šœแด‡สŸสŸ ๐š ๐š‘๐š˜ ๐™ธ ๐šŒ๐š˜๐š—๐š—๐šŽ๐šŒ๐š๐šŽ๐š ๐š ๐š’๐š๐š‘ ๐š๐š‘๐š›๐š˜๐šž๐š๐š‘ ๐™ต๐šŠ๐šŒ๐šŽ๐š‹๐š˜๐š˜๐š”. ๐š‚๐š‘๐šŽ ๐š‘๐šŠ๐šœ ๐š‘๐šŽ๐š•๐š™๐šŽ๐š ๐šŒ๐š˜๐šž๐š—๐š๐š•๐šŽ๐šœ๐šœ ๐š™๐šŽ๐š˜๐š™๐š•๐šŽ ๐š๐š›๐š˜๐š  ๐š๐š‘๐šŽ๐š’๐š› ๐š’๐š—๐šŸ๐šŽ๐šœ๐š๐š–๐šŽ๐š—๐š๐šœ ๐šŒ๐š˜๐š—๐šœ๐š’๐šœ๐š๐šŽ๐š—๐š๐š•๐šข, ๐šŠ๐š—๐š ๐š๐š‘๐šŽ๐š›๐šŽ ๐šŠ๐š›๐šŽ ๐š๐šŽ๐šœ๐š๐š’๐š–๐š˜๐š—๐š’๐šŠ๐š•๐šœ ๐šŠ๐š•๐š• ๐š˜๐šŸ๐šŽ๐š› ๐šœ๐š˜๐šŒ๐š’๐šŠ๐š• ๐š–๐šŽ๐š๐š’๐šŠ ๐šœ๐š™๐šŽ๐šŠ๐š”๐š’๐š—๐š ๐š๐š˜ ๐š‘๐šŽ๐š› ๐š›๐šŽ๐šœ๐šž๐š•๐š๐šœ. ๐™ธโ€™๐šŸ๐šŽ ๐š™๐šŽ๐š›๐šœ๐š˜๐š—๐šŠ๐š•๐š•๐šข ๐šœ๐šŽ๐šŽ๐š— ๐š‘๐šŽ๐š› ๐šœ๐š’๐š๐š—๐šŠ๐š•๐šœ ๐š๐šŽ๐š•๐š’๐šŸ๐šŽ๐š› ๐š›๐šŽ๐šŠ๐š•, ๐š๐šŠ๐š’๐š•๐šข ๐š™๐š›๐š˜๐š๐š’๐š๐šœ.

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Policies2006
04/08
@ Good.
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confused-student1028
04/07
Force majeure chess move by Howmet. Supply chain's delicate balance. Who's got the leverage now? ๐Ÿค”
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Groomsi
04/08
@confused-student1028 Howmet playing hardball, but will it pay off?
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anonymus431
04/07
Boeing vs. Airbus is like $TSLA vs. $AAPL, but with more metal and less Elon. Who's winning in your portfolio?
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greenpride32
04/07
Nearshoring and reshoring might be the play, but it's not without its own set of headaches and costs.
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Guy_PCS
04/07
Diversify or die trying in this tariff mess.
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Mojojojo3030
04/07
Airbus vs. Boeing: a BAttle beyond borders.
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Phuffu
04/07
Force majeure is just a fancy way of saying "tariffs suck." Hope your contracts are tight, peeps.
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RubiksPoint
04/08
@Phuffu Hope your hedges are tight, or this could be a nose-dive. ๐Ÿš€
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SHIT_ON_MY_BALLS
04/07
Supply chain resilience is the new alpha.
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Hoshigetsu
04/07
Tariffs are like a bad trade, gotta hedge those risks, folks. Supply chain resilience is the new alpha.
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Dry_Entertainer_6727
04/07
@Hoshigetsu Supply chains r tough now.
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whiteiversonyeet
04/07
Tariffs are wildcards, hedging bets with $LMT, $BA
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enosia1
04/07
OMG!I successfully capitalized on the HWM stock's bearish trend, generating $243!
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