Trump's tariffs could ground aerospace's rebound
By Thomas Black / Bloomberg Opinion
The captains of the aerospace industry will gather in Paris next week for the marquee aircraft show and, while order announcements usually grab the headlines, the real driver of value the year will be the further recovery of the pandemic-battered aerospace supply chain, though a new obstacle has emerged.
The world wants more aircraft. Airlines want to expand fleets and replace older aircraft that are more costly to operate. Airbus SE and Boeing Co. want to build more planes. The only hang-up has been the recovery of the aerospace supply chain, one of the hardest hit by covid-19 and the slowest to recover because of its unique structure.
Just as the specialized machine shops that make complex parts have started to regain their footing and prepare for Boeing’s large production increases, the industry now faces upheaval from tariffs that could drive up costs and create scarcity of some materials, such as rare earth elements.
It doesn’t make much sense for the global aerospace sector to be caught up in President Trump’s attempt to restructure world trade. The U.S. aerospace industry, including defense, is the only significant manufacturing activity that runs an annual trade surplus; to the tune of about $75 billion. It’s dominated by North American and European companies and is one of the few in which Asia, especially China, plays a small role. That means building planes isn’t a national security problem like building ships is. To the contrary, the commercial aerospace supply chain also feeds a robust military sector, making it a security asset.
https://www.heraldnet.com/opinion/comment-trumps-tariffs-could-ground-aerospaces-rebound/