A new report from KBRA examines the significant impact of the Trump administration’s 2025 tariff policies on the aviation industry, warning of rising costs, disrupted supply chains and reduced competitiveness for U.S. aerospace firms.

The tariffs — 25% on goods from Canada and Mexico, up to 145% on Chinese imports, and a baseline 10% on most other countries — affect raw materials like steel and aluminum, as well as aircraft and parts. The report estimates the U.S. aerospace industry could face up to $5 billion in additional annual costs.

Tariff-related disruptions are particularly damaging due to the aviation sector’s reliance on complex, globally integrated supply chains. Aircraft components often cross borders multiple times during production and finding alternative suppliers can be time-consuming due to strict certification requirements.

Aircraft prices may rise by more than 10%, with U.S. airlines potentially bearing the brunt of new 25% tariffs on Airbus jets. These increases could be passed on to passengers, pressuring demand further as economic uncertainty and weakened consumer confidence continue to soften domestic and international bookings.

Air cargo operations are also being affected, with changes in trade routes, customs delays and reduced volumes. Lower e-commerce growth, a knock-on effect of consumer caution, adds further strain.

The report also highlights competitive risks for Boeing, a major U.S. exporter, which could lose ground to Airbus and other global rivals. KBRA warns that a broader economic slowdown tied to ongoing trade tensions could pose additional long-term challenges for the aviation industry.

To read the full report, visit kbra.com.