India caught in crosswinds of US aerospace tariffs

The US aerospace industry is bracing for turbulence. With the Trump Administration announcing sweeping new tariffs 10% on all imports starting on April 5, 2025, followed by additional ‘reciprocal tariffs’ from April 9 on countries with which the US runs the largest trade deficits—the sector fears rising costs and long-term damage to its supply chain.

These ‘reciprocal tariffs’ target several key trade partners:

• -China faces the steepest hike at 34%, followed by
• - Indonesia at 32%
• -India at 26%
• -Japan and Malaysia each at 24%
• -The European Union at 20%, and both
• -Israel and the Philippines at 17%

This follows an earlier move to impose a 25% tax on imported steel and aluminum—materials essential for aerospace production.

While the Administration argues that these measures are necessary to reduce US trade deficit and boost domestic manufacturing, aerospace leaders disagree. They say their industry is fundamentally different and already delivers a trade surplus by exporting more than it imports.

According to Flight Global, Dak Hardwick, vice-president of International Affairs at the Aerospace Industries Association (AIA), stressed that industry leaders were actively trying to help the Administration understand that aerospace and defence were fundamentally not like other manufacturing sectors. He said they were making constant efforts through meetings and calls to explain how unique their industry was.

The aerospace sector also faces critical challenges that tariffs can make worse. Hardwick noted that building new manufacturing facilities in the US was not a quick and easy task; it could take up to three years for certification and as long as 10 years to become fully operational. Compounding the problem, the US lacked a surplus of skilled aerospace workers, he pointed out. In fact, labour shortages were already limiting suppliers’ ability to meet the growing demand, Hardwick added.

Mark Norton, representing aerospace companies in the State of Washington, also struck a note of caution, saying that assuming US factories could instantly replace all foreign-made components would be a mistake. The aerospace supply chain was highly complex and tightly regulated, he said, making any quick changes almost unachievable. With many parts still manufactured overseas, there was growing concern about the ripple effects of these tariffs across the entire industry.

What the Tariffs Mean for India

For India, the 26% reciprocal tariff could cast a shadow over its growing aerospace ties with Boeing. In 2023, Air India placed a huge order for 220 Boeing aircraft, with options for 70 more, signalling a deepening partnership. However, the new tariffs could increase costs for Boeing, potentially slowing down production or raising prices, which might delay deliveries to Indian carriers. With Air India’s CEO already expressing concerns over Boeing’s quality issues in early 2025, any tariff-induced disruptions could further strain this relationship, pushing India to reconsider its reliance on US manufacturers or seek such alternatives as Airbus.

Beyond India, other nations heavily invested in the US aerospace market are sounding alarm bells. Japan, facing a 24% tariff, supplies critical components, such as carbon fibre and titanium parts for Boeing’s 787 Dreamliner. Any cost hikes, or retaliatory measures from Tokyo could disrupt production timelines, leaving Boeing and its customers scrambling to adjust.

Smaller suppliers, often operating on razor-thin margins, are particularly vulnerable. Industry analysts predict that many may not survive the combined pressure of tariffs and the inability to pass costs onto larger manufacturers. This could lead to consolidation or outright closures, further concentrating the supply chain and reducing resilience in an already strained sector.

the Broader Economic Fallout…

The broader economic fallout is another worry. Aerospace exports, a bright spot in the US trade balance, could take a hit if international buyers turn to such competitors as Airbus, which may not face the same tariff-driven cost increases. The risk of losing market share looms large, especially in such fast-growing regions as the Asia-Pacific (A-Pac), where demand for new aircraft is soaring.

As costs go up, suppliers are expected to shoulder much of the burden, pressuring the entire supply chain—all the way up to such top-tier companies as Boeing. Boeing, itself, has not publicly commented, but its CEO, Kelly Ortberg, told the Senate that 80% of Boeing’s parts are sourced from outside the US and 80% of its aircraft are delivered to foreign buyers.

United Airlines CEO Scott Kirby expressed cautious optimism, saying the goal of creating stable middle-class jobs was a meaningful one. But not everyone shares his hopeful outlook. Many in the industry are struggling to find any real benefit and, instead, expecting rising prices, supply chain delays and long-term disruption.

Kevin Michaels, managing director of aerospace consulting firm AeroDynamic Advisory, criticized the tariffs in a blunt LinkedIn post on April 2. “I’m astounded by the stupidity on display today,” he wrote. “This will not end well. Inflation and a trade war are on the way—just when the US is doing great in the global economy.”

There is also a legal and historical angle. Since 1980, aircraft sales have been free from tariffs in the US and other nations under the Agreement on Trade in Civil Aircraft. Hardwick emphasized that this had clearly benefited the US, and said, “We can prove that a tariff-free aerospace industry is good for the country. We already represent the kind of strong production economy the Administration is looking for.”

Despite all this, the aerospace sector now finds itself caught in the middle of a broad trade policy shift. Instead of strengthening one of America’s top-performing industries, these tariffs could end up grounding it.

(The author of this article is a Defence, Aerospace & Political Analyst based in Bengaluru. He is also Director of ADD Engineering Components, India, Pvt. Ltd, a subsidiary of ADD Engineering GmbH, Germany. You can reach him at: girishlinganna@gmail.com)

(Disclaimer: The views expressed above are the author's own and do not reflect those of DNA)