The Trump administration’s zig-zagging tariff policy will most likely be the focus of future economics lectures at U.S. Universities, when it comes to looking at how reckless tariff decisions can cause lasting damage to one’s own industry – in particular when it comes to the aviation sector.
As things stand, Trump’s threat to impose a 30% tariff threshold on EU products exported to the USA, and even 50% on imports from Brazil, come 01AUG25, resembles a trade embargo.
The losers in this tariffs spiral are manufacturers, consumers, traders and the transport industry. But hardest hit are U.S. manufacturer Boeing and its Brazilian peer, Embraer. This is because a large proportion of the components that the U.S. frame maker needs for assembling its B737 MAX or the B787, stem from European sources or are contributed by second or third tier partners from Japan, Korea or other manufacturers based in the Far East.
Ill-timed decision
Provided Trump’s tariffs come into force, the price of these supplies payable from Boeing’s coffers will make the frame maker’s jetliners significantly more expensive. Hence, demand will drop and sales figures will plummet.
For Boeing, Trump’s tariffs are an ill-timed decision. The manufacturer is currently recovering from its multiple crises and is on the upswing. This can be seen by the wide-body jet B777-X, which was due to be delivered to launch customer Lufthansa, in 2020, but the program was repeatedly delayed due to a series of technical setbacks. However, Boeing assured trade media that the aircraft is now on track. The same applies to the planned cargo version of the big jetliner.
Only losers, no winners
Airbus is likely to suffer less from Trump’s tariff policy because, unlike Boeing, the European manufacturer diversified the production of its aircraft by erecting final assembly lines in Canada (Mirabel, Quebec), China (Tianjin), and the USA (Mobile), complementing its main production sites in France (Toulouse) and Germany (Hamburg). If Trump does not withdraw his tariff threat against the EU, Brussels is likely to impose counter-tariffs on U.S. products, which would increase the price of aircraft turbines from Pratt + Whitney, CFM International, and General Electric, harming well-paid jobs in the USA.
There are still eleven days left to reach a trade agreement suiting both sides. But if Trump persists with his tariff stampede, there is a risk of serious rifts between Washington and Brussels, where there are only losers, not winners.
In comparison to Airbus, the outlook for Brazilian manufacturer, Embraer, is even gloomier as thanks to Trump’s tariff announcement, its aircraft, if ordered by U.S. airlines, will become 50% more expensive come AUG25. In this case, however, the reason is not economic but purely political. Embraer currently has around 200 orders placed by Skywest, American Airlines and Republic. In addition, the Brazilians have just entered into the production of freighters that fill a global gap in the medium production segment and can support integrators to provide feeder services on thin routes. This program is also on the brink if Trump does not back down from his tariffs.
Backing Brazil’s Messiah
By imposing these tariffs, the U.S. autocrat wants to support his brother in faith, Jair Messias Bolsonaro, putting pressure on the Brazilian judiciary to withdraw the accusation of a coup d’état orchestrated by former president Bolsonaro and some followers on 08JAN23. On his Truth Social platform, Trump addressed Bolsonaro last Thursday (17JUL25): “I have seen how terribly you are being treated by an unjust system that is directed against you. This process should end immediately!”
In the meantime, the Brazilian government has announced a tit-for-tat policy by imposing tariffs that match those set by Trump. Last week, the country’s Supreme Court ordered Bolsonaro to wear an electronic tag as he is a flight risk seeking asylum in the USA. His passport was already revoked on 08FEB24.
The tariffs Trump has imposed on Brazil, the EU, and others, will probably be on the curriculum of future students of economics and international politics at U.S. universities – as a prime example of erratic government policy.
