Aviation on Hold: How Tariffs and Uncertainty Are Disrupting the Skies

By Erez “Terry” Barkaee

April 3, 2025

Tariffs, Turbulence, and Turning Points: How Trump’s Economic Agenda Is Reshaping the Market

Since Donald Trump was sworn in for a second term just two months ago, the economic landscape has grown increasingly uncertain.

At the center of this disruption lies a sweeping new tariff policy - Introduced with great fanfare as “Liberation Day” that aims to restructure global trade and incentivize U.S. based manufacturing.

But on the ground, that bold vision is already sending shockwaves through key industries, including aviation, and prompting an uneasy market slowdown.

A 10% Tariff Baseline—and Much More

On April 2, Trump announced a blanket 10% tariff on all imported goods, with even steeper rates for select trade partners - 34% on Chinese imports, 46% on Vietnamese goods, and 20% on those from the European Union.

These tariffs are presented as retaliatory, intended to counter what Trump calls decades of unfair trade practices and to lure manufacturing back to U.S. soil.

Yet, this policy shift comes with consequences.

The stock market reacted swiftly and negatively, recording its worst start to a year since 2022.

Business leaders and economists alike warn of rising costs, a slowdown in growth, and a potential recession. And those warnings are already playing out in the day-to-day realities of the supply chain.

Supply Chain Shock: How Shipping Costs Inflate Prices Across Borders

While tariffs dominate headlines, rising international shipping costs are another critical and often underestimated factor reshaping industry economics.

For aviation and other global sectors that rely heavily on cross-border logistics, the impact is compounding.

Take carbon fiber composite materials, which are widely used in aircraft structures for their strength-to-weight advantage.

Many of these materials are manufactured in Japan, South Korea, and Germany, then shipped to North American assembly plants.

Just a few years ago, the average trans-Pacific container shipping fee hovered around $5,000.

But in today’s volatile market, those costs have surged 30–50% in some lanes due to fuel prices, port congestion, and retaliatory tariffs.

If we apply this to a shipment of composite rolls valued at $50,000, a shipping fee that once cost $2,000 now exceeds $3,000–$3,500.

Under the new tariff rules, the 10% import duty applies to the full landed cost, meaning the tariff bill jumps from $5,200 to $5,350 or more.

These higher logistics costs cascade through the supply chain—driving up the final price of a fuselage panel, control surface, or cabin interior part.

For aviation OEMs and MROs operating on tight timelines and margins, this isn’t just a cost issue - It’s a supply chain risk that forces hard decisions: delay orders, cut volume, or pass the cost downstream.

A Pause Across the Industry

In just the last month, conversations with colleagues and clients in the aviation industry have revealed a growing concern: a freeze on purchases.

RFQs (Requests for Quote) have slowed to a trickle, and some customers have halted orders altogether. This isn’t business as usual, it’s a direct response to the uncertainty that Trump’s trade agenda has unleashed.

Aviation, like many global industries, relies on international supply chains for parts, materials, and finished products.

Higher import costs don’t just affect prices, they affect planning, hiring, and strategic growth.

For companies that budget down to the cent, a 10%–30% increase in material costs can paralyze operations.

Short-Term Pain, Long-Term Possibilities?

Despite the immediate strain, some in the industry are viewing this moment as a potential turning point.

If Trump's vision of reshoring manufacturing becomes reality, new domestic opportunities could emerge, especially for suppliers agile enough to adapt. Investments in automation, domestic logistics, and supply chain redundancy could gain favor as businesses look for ways to de-risk international exposure.

Still, it’s a gamble.

As history shows (notably with the 1930s Smoot-Hawley tariffs), protectionism can backfire if not carefully managed.

In Trump’s last term, tariff-induced job creation was often offset by job losses in downstream industries.

Today, with more automation and higher building costs, even a resurgence in domestic production may not lead to meaningful employment gains.

Where Do We Go From Here?

The aviation sector, and the broader market faces a critical question:

Is this tariff era a short-term disruption or the start of a long-term reshaping of global commerce?

For now, the slowdown is real, and the uncertainty is causing hesitation across the board.

But for businesses willing to evolve, this could also be a window to reimagine operations and secure more resilient supply chains.

One thing is clear: the rules of the game have changed, and companies must quickly decide whether to adapt, resist, or wait it out.