Jun 10, 2025 / By Sam Burritt
“I can't predict, and I don't think anyone can in this environment, but I would say that we're concerned.”
That quote comes from William Ampofo, SVP at Boeing Global Services, speaking at an industry conference in April 2025 about the potential impact of tariffs on supply chain resilience. But it’s close to a universal sentiment across the commercial aviation sector currently operating under the capricious, unpredictable and whiplash-inducing Trump tariff regime.
The U.S. aviation industry has been historically tariff-free in the deregulation era, which has allowed it freedom to expand to meet business and consumer demand for ease of travel. That is changing, with new duties imposed on critical materials for aircraft construction (including this week’s doubling of steel and aluminum tariffs, which could change again at any moment) and an ongoing Commerce Department “investigation” into the import of commercial aircraft, jet engines and related parts.
While these policies will almost certainly saddle the industry (and ultimately travelers) with higher costs, the real threats are the unforeseen and unpredictable impacts and knock-on effects. How will these levies impact demand, and airlines’ long-term ability to meet that demand? How will manufacturers adjust their supply chains, and when? Most importantly, how are airlines, their suppliers, travel technology companies and other enterprises in the global air travel ecosystem expected to make strategic planning decisions in such a volatile and uncertain environment?
At a time when the status quo is being systematically dismantled, long-held assumptions and historical models become unreliable. But that doesn’t mean you need to operate in the dark. In the air travel industry, the most valuable tools to combat uncertainty are insight, data and research.
Shaking up supply chains
Perhaps no other insight is more important right now than a clear-eyed assessment of the potential impacts of tariffs on aircraft manufacturing, which directly affects the air travel industry’s ability to operate. From the supply of parts to the supply of labor to build and maintain planes, the aviation sector has benefited from a global supply chain built on relatively unrestricted trade. It relies heavily on specialized suppliers that are spread out around the world, with some crucial parts being produced by only a few manufacturers or just one.
Despite legitimate criticisms of the sustainability of this system (supported by well-publicized production delays due to supply limitations), tariffs could exponentially increase those problems. Considering that the U.S. aerospace industry has produced one of the largest trade surpluses of any industry for years – and is expected to export another $125 billion this year – even non-targeted levies like the steel and aluminum tariff increases will have a substantial impact.
This is why, even absent policies specifically aimed at the aviation industry, GE Aerospace said it expected $500 million in tariff costs this year. RTX, which also makes plane engines and parts, estimated last month that tariffs this year would cost it $850 million.
If major manufacturers are compelled to anticipate (and deal with) these increased expenses, any downstream entity, including airlines, must reckon with them as well. Understanding how suppliers will approach and react to impending or already-enacted tariffs can inform more successful investment, operating and selling strategies.
Unwelcoming policies, uncertain demand
Those strategies will also be affected by travel demand, which has also become precarious since the start of 2025. Consumer demand for inbound travel to the U.S. is reduced, as travelers are choosing to go elsewhere. Data from hotel site Trivago shows double-digit percentage declines in bookings to the US from travelers based in Japan, Canada and Mexico – all countries significantly impacted by Trump’s tariffs.
It’s difficult to attribute the entirety of this decline to tariffs, however. The World Travel & Tourism Council (WTTC) projected that visitor spending in the U.S. would fall from $181 billion in 2024 to less than $169 billion this year because of a decline in "international traveler confidence," which includes concerns over onerous border policies, other countries’ travel advisories and visa uncertainty as well as tariffs specifically.
Whatever the impetus, this reduced demand could mean reduced demand for parts and labor for the aviation industry, affecting those manufacturers within aviation supply chains. It could also mean reduced demand for travel technology solutions designed for airlines, hotels and other travel businesses with exposure to the U.S. market. Tracking and predicting those demand fluctuations accurately can be a competitive advantage for suppliers of these products and services.
Unknown unknowns (but we kinda know)
The economic impact of tariffs will extend beyond aviation supply chains and travel demand, in ways that are somewhat harder to predict. Fears of a global recession stemming from a prolonged trade war are well-publicized, but the depth, breadth and length of potential slowdown are impossible to gauge. The bond market’s reaction to tariffs (and trade policy more broadly) has weakened the dollar, and sparked whispers of a shift to a new global reserve currency.
Only time will tell whether these macroeconomic effects come to fruition, but if they do, they will not bypass the aviation industry. It’s never been more important to have access to research that can aid your forecasting and help target opportunities.
The antidote to uncertainty: insights
The cumulative effect of this administration's tariff policies is yet to be determined, but the immediate impact on the global air travel sector is clear: increased uncertainty. The inability to make confident strategic plans is as costly as any import duty— more so, an economist might say. The only antidote to uncertainty, in our estimation, is insight. No one has a crystal ball, particularly not in the Trump era, but with the right research capabilities, you can make more educated decisions, pick out opportunities amid the threats and find clarity within the chaos.
At THINKINK, we can help guide you to insights amid the uncertainty. Contact us to build a more resilient revenue strategy.
