NEW YORK–(BUSINESS WIRE)–#creditratingagency–KBRA releases research exploring the potential impact of trade tensions and tariffs on the aviation industry. The aviation industry—a critical pillar of global connectivity and economic growth—is facing significant challenges due to the Trump administration’s tariff policies implemented in early 2025. These tariffs, targeting major trading partners such as Canada (25%), Mexico (25%), and China (up to 145%), along with a baseline 10% levy on most other countries, have introduced unprecedented uncertainty and cost pressures across the aviation value chain. This KBRA report examines the multifaceted impact on airlines, original equipment manufacturers (OEM), and aircraft lessors, drawing on recent developments and industry responses.
Key Takeaways
- Tariffs on steel, aluminum, and goods from Canada, Mexico, and China raise production costs for aircraft and parts, with an estimated annual cost increase of up to $5 billion for the U.S. aerospace industry.
- The complex global supply chain—reliant on specialized and regulated suppliers—face disruptions due to tariffs, as components cross borders multiple times, and alternative suppliers require lengthy certification processes.
- Tariffs could increase aircraft prices by more than 10%—costs that may be passed on to airlines and ultimately to passengers. Notably, 25% tariffs on Airbus jets are expected to disproportionately impact U.S. carriers.
- Economic uncertainty from tariffs has lowered consumer and corporate confidence, leading to declining demand for domestic and international travel, with major U.S. airlines reporting softened bookings and revised revenue forecasts.
- Tariffs disrupt air cargo flows by altering trade corridors, causing customs delays, and reducing trade volumes, with indirect effects of lower e-commerce growth owing to weakened consumer confidence.
- The U.S. aerospace sector—a net exporter—risks losing competitiveness, particularly for Boeing, which may be more impacted than Airbus.
- Generally, tariffs and trade wars could lead to a global economic slowdown, further dampening aviation growth.
Click here to view the report.
Recent Publications
- Private Credit: Tariffs and Market Volatility Impact on Private Credit Corporates
- Private Credit: Minority Interests and JV Structures—Through the Looking Glass
About KBRA
KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.
Doc ID: 1009271
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