US manufacturing giants GE Aerospace and RTX expect to incur hundreds of millions of dollars in tariff-related expenses in 2025, with GE saying it intends to impose “tariff surcharges” on customers to help minimise financial fallout.
Still, both firms on 22 April reported financial results that exceeded some analysts’ expectations, citing ongoing strong demand, particularly for aftermarket services.
The companies do not expect the trade war’s full impact to hit their bottom lines until later this year.
In the meantime, both manufacturers are walking a fine line, expressing support for President Donald Trump’s goal of bolstering US manufacturing while pushing for exemptions from import duties.
“We will continue to advocate an approach that re-establishes zero-for-zero tariffs,” GE Aerospace chief executive Lawrence Culp said during the firm’s 22 April first-quarter earnings call. GE also supports “promoting free and fair trade” and “efforts to revitalise US manufacturing”, Culp adds.
GE estimates Trump’s new tariffs could cost it $500 million this year, while RTX puts the potential impact at $850 million.
RTX has not updated its 2025 financial guidance to account for tariffs, owning to uncertainty. Its stock price had slipped 9% on 22 April as of midday.
“Our supply chain and customer base are global and we import raw materials and parts and modules from around the world,” says RTX CEO Chris Calio. “The situation remains fluid and it’s difficult to assess the impact.”
He says RTX could have limited ability to pass tariff costs to customers, saying such moves will be determined by what the “market will bear”.
“On pricing, we have been operating in a highly inflationary environment over the last several years. We are proficient in where and how to pass on higher costs,” says Calio. “We will continue to look for opportunities to do that, but it’s not a panacea to all things tariffs.”
Of the $850 million tariff hit RTX warns it could see this year, the company attributes $250 million to tariffs on Canada and Mexico, $250 million to China tariffs, $300 million to other countries and $50 million to the USA’s new aluminium and steel import taxes.
RTX’s commercial businesses – Collins Aerospace and Pratt & Whitney (P&W) – will shoulder most of the fallout with about $400 million in potential charges each, while the defence unit Raytheon should be largely unscathed.
Collins earned a $1.1 billion first-quarter operating profit, up 28% year on year, while P&W turned a $580 million profit, a 41% year-on-year bump.
“Our company remains exceptionally well positioned in all of our key end markets,” Calio says.
GE’s $500 million 2025 tariff-cost estimate assumes Trump’s 10% tax on imports from all countries remains in place, and that the USA’s so-called “reciprocal tariffs” – additional taxes imposed on imports from nearly 60 specific counties – resume after the current 90-day pause. Trump paused those measures – except against China – on 9 April.
“Given our global business, tariffs will result in additional cost for us and our suppliers,” GE says. “We are optimising operations and leveraging existing programmes and strategies to reduce the impact from tariffs. Additionally, we are taking measures to control cost and implementing pricing actions.”
Specifically, the company is considering implementing “a tariff surcharge… Hopefully it’s not a permanent thing”, says GE chief financial officer Rahul Ghai.
Even with a $500 million hit, GE still anticipates hitting its previously issued 2025 financial guidance. Investors reacted positively, sending GE’s stock price up nearly 4% on 22 April.
“Based on what we know today, these actions, along with our solid first quarter and commercial services backlog of over $140 billion, enable us to maintain our full-year guidance,” says CEO Culp.
The guidance calls for GE’s revenue to increase in the low-double-digit percentage range in 2025 and for the company to turn a $7.8-8.2 billion operating profit, up from $7.3 billion last year.
In the first quarter, GE turned a $2 billion profit, up 26% year on year, with revenue up 11% year on year to $9.9 billion.
“Operationally, we are performing better than we expected,” says Ghai. “We feel better about the year… even with the tariffs, than we did back in January.”
