AIA: Aerospace Industry Concerned by Aluminum Tariffs

 - March 5, 2018, 12:26 PM

America’s aerospace and defense industry is “deeply concerned” that President Trump’s planned import tariffs on steel (30 percent) and aluminum (10 percent) “will raise costs and disrupt the supply chain, putting U.S. global competitiveness at risk,” according to the Aerospace Industries Association (AIA). “There is also a significant threat for retaliation from other countries towards American-made products.”

The U.S. aerospace industry relies heavily on imported aluminum, hence the concerns. Domestic aluminum production of 740 tons last year was dwarfed by the 6,300 tons of aluminum imports into the U.S., according to the latest data from the U.S. Geological Survey. Canada is by far the largest supplier of aluminum to the U.S., at 56 percent. This is followed by Russia, 8 percent; United Arab Emirates, 7 percent; China, 6 percent; and other countries, 23 percent, the agency said.

These tariffs will affect “companies big and small in the aerospace and defense world,” said AIA president and CEO Eric Fanning. “More importantly, we’re concerned about retaliation. The aerospace and defense industry generates the largest net surplus in the manufacturing sector—more than $86 billion a year. These companies thrive on the exports of their products.”

However, Citi defense and aerospace researcher Jonathan Raviv downplayed these concerns. “We believe the A&D sector is likely to be broadly unaffected by recent concerns about raw material pricing from Trump’s recent decision to impose tariffs on steel and aluminum,” he said. “This is for four reasons: very high value add; increasingly low steel and aluminum content; escalation clauses; and long-term supply agreements.”