Now Reading: Major U.S. defense contractors divided over impact of Trump administration's tariffs
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Major U.S. defense contractors divided over impact of Trump administration's tariffs
Major U.S. defense contractors divided over impact of Trump administration's tariffs
The U.S. defense sector is facing an uncertain economic scenario due to the tariffs imposed by the Trump administration. While some major companies in the sector, such as RTX Corp. anticipate heavy losses by 2025, others such as Lockheed Martin and Boeing are more confident in their ability to mitigate the effects of these trade policies.
During the recent earnings conference call on April 22, Neil Mitchell, RTX's CFO, warned that the company could lose as much as $850 million by 2025 if tariffs remain in place. This figure contemplates $250 million in losses from tariffs on products from Canada and Mexico, another $250 million from tariffs on China, $300 million from 10% tariffs applied to most countries, and an additional $50 million from tariffs on steel and aluminum.
Mitchell explained that much of this economic impact will be felt in the second half of 2025, when the company's current inventory will be depleted. Although RTX has begun to implement measures such as the creation of free trade zones, customs rebates and changes in suppliers and assembly centers, they recognize that these strategies are still in the early stages.
"Where possible, we will pass these additional costs on to customers, but it is not a definitive solution."said RTX CEO Chris Calio, making it clear that the problem will require deeper structural adjustments.
Lockheed Martin and Boeing: confidence in their mitigation strategies
Unlike RTX, Lockheed Martin and Boeing are more optimistic about the impact of the tariffs.
Jim Taiclet, CEO of Lockheed Martin, affirmed that the solid start to the year will allow absorbing the negative effects of the tariffs. In addition, Evan Scott, the company's CFO, assured that Lockheed has contractual mechanisms in place to recover the costs associated with the tariffs and that its supply chain is less exposed to products of Chinese origin.
Lockheed has also strengthened its stockpile of strategic materials, such as rare earths, and continues to seek alternative suppliers, in line with the government's efforts to strengthen local production of critical raw materials.
For his part, Boeing CEO Kelly Ortberg downplayed the impact of the tariffs, noting that much of its supply chain is already based in the United States and that imports from Canada and Mexico are exempt in many cases thanks to trade agreements.
Ortberg added that the company has increased its aluminum and steel inventories to protect against future price increases, thus ensuring continuity of production.
Aviation industry calls for tariffs to be lifted
Ortberg warned that the situation is "dynamics" and that the aviation industry maintains an open dialogue with the Trump administration to highlight the importance of trade agreements.
"Aircraft exports generate a key trade surplus for the U.S. economy, and eliminating tariffs would help preserve this competitive advantage."said Ortberg, who confirmed that the company is in direct contact with high-level officials, including the president himself.
Pending possible diplomatic agreements that could alleviate this situation, the U.S. defense industry is in a moment of strategic redefinition, balancing the need to maintain its global competitiveness with the challenges posed by current trade policies.
