Airbus Faces Tariff Crossroads: Can Reciprocal Measures Secure Trade Peace?

The transatlantic aerospace rivalry is reignited as Airbus CEO Guillaume Faury doubles down on a bold strategy to combat U.S. trade threats: retaliate with reciprocal tariffs on Boeing aircraft if negotiations fail. This high-stakes gambit underscores the precarious balance between global trade policy and corporate strategy in 2025.

The Tariff Threat and Strategic Gambit

Faury’s April 2025 remarks signal a shift in Airbus’s approach to the EU-U.S. trade standoff. If talks collapse, he argues, Europe should impose 15% tariffs on Boeing planes—a direct mirror of U.S. measures—to force higher-level negotiations. This tactic harks back to the 2019 trade war, when tariffs on $7.5 billion of each side’s aviation exports were later suspended under Biden.

The CEO’s logic is clear: Boeing’s reliance on European markets for its 787 Dreamliner (60% of global orders) makes the U.S. manufacturer vulnerable. “A trade war is a lose-lose, but Boeing would feel it more,” Faury told Agence France-Presse. Yet the risk remains: reciprocal tariffs could spark a cycle of retaliation, disrupting supply chains for both companies.

Financial Resilience Amid Tariff Uncertainty

Airbus’s Q1 2025 results reveal a company navigating turbulence with relative stability. Key metrics include:
- Net income of €793 million, up 33% year-on-year, driven by strong commercial aircraft deliveries.
- 820 aircraft deliveries reaffirmed for 2025, with production targets intact: 75/month for the A320 family by 2028 and 14/month for the A220 by 2026.
- €26 billion in liquidity, providing a financial cushion against disruptions.

However, the looming tariff threat complicates U.S. sales. Airbus now refuses to absorb tariffs on European-assembled jets (e.g., A330/A350) destined for the U.S., shifting costs to buyers. For example, Delta Air Lines’ A350 deliveries now route via Tokyo to avoid duties—a tactic first used in 2019.

Airbus’s shares have outperformed Boeing’s by 28% over five years, reflecting stronger free cash flow and production discipline.

Supply Chain Headwinds and Cost Pressures

Despite financial strength, Airbus faces headwinds. Delays at supplier Spirit Aerosystems—which provides wings and fuselages for the A350 and A220—have forced production cuts and a €439 million compensation payout. While 2025 costs are covered, Faury warns of “mid-three-digit million” expenses in 2026–2027, complicating profit margins.

The A321XLR, a flagship model for U.S. carriers like JetBlue, also faces risks. If classified as “permanently imported,” these jets could incur 10% tariffs, raising prices for airlines already battling fuel costs.

The Broader Trade Landscape

The EU-U.S. trade relationship remains a powder keg. The EU’s €157 billion goods surplus with the U.S. in 2023 fuels American protectionism, while the $200 billion aerospace sector sits at the heart of the dispute.

Faury’s call for zero tariffs on civil aviation parts aligns with industry consensus—but political will lags. The EU-U.S. Trade and Technology Council (TTC), despite its lofty goals, has yet to resolve subsidies disputes dating back to the WTO’s 2011 “Airbus-Boeing” case.

Investment Takeaways

1. Tariff Risk Mitigation: Airbus’s rerouting strategy and supplier agreements (e.g., Spirit) buy time, but sustained tariffs could dampen U.S. demand.
2. Financial Flexibility: €26 billion in liquidity provides a buffer, but mid-term costs from Spirit and potential tariff disputes could strain margins.
3. Competitive Edge: Boeing’s 777X delays and MAX underperformance (24 deliveries in Q1 vs. 136 for Airbus) give Airbus a narrow runway to capitalize.

The EU’s goods surplus with the U.S. has grown 12% since 2020, amplifying pressure for tariffs on European exports.

Conclusion

Airbus’s 2025 outlook hinges on two variables: the resolution of EU-U.S. trade talks and its ability to navigate supply chain bottlenecks. With a reaffirmed delivery target of 820 aircraft and €7.0 billion in EBIT, the company appears financially resilient. However, Faury’s reciprocal tariff stance introduces geopolitical risk—a gamble that could either force a compromise or escalate costs for both sides.

Investors should monitor three key metrics:
1. Progress in EU-U.S. trade negotiations by mid-2025.
2. Spirit Aerosystems’ ability to stabilize A350/A220 production.
3. U.S. airline demand for European-assembled jets amid rising costs.

For now, Airbus’s financial discipline and production targets justify cautious optimism—but the clouds of trade war loom large.

Final Word: Airbus’s strategy balances boldness and pragmatism, but success depends on whether Faury’s tariff ultimatum forces a deal—or triggers a storm.