One of Boeing’s largest European customers has warned that the imposition of tariffs on imported aircraft by the administration of Donald Trump could be counter-productive for both the US economy and a capacity-starved airline industry.
Speaking during the A4E Aviation Summit in Brussels on 27 March, Ryanair group chief executive Michael O’Leary said that “given the amount of American parts on Airbus aircraft”, the net benefit of attempting to boost US manufacturers’ fortunes via tariffs on aircraft and parts imports would be questionable.
Any impact on European manufacturer Airbus’s costs and sales volumes would be felt by its US suppliers, helping to create the risk of “mutually assured destruction”, he suggests.
Crucially, European businesses play key roles in Boeing’s supply chains, meaning its costs could rise as a result of any tariffs imposed by the US government on parts imported from Europe.
Moreover, any retaliatory measures involving European tariffs on aircraft parts could further hit US businesses that supply Airbus, while their imposition on finished aircraft could have a significant impact on the US airfarmer’s sales – which would reverberate through its US and non-US supply chains – in a crucial market.
The Ryanair chief insists it would be unwise for the US government to disrupt aerospace supply chains at a time when all airlines – US-based or otherwise – are already grappling with Airbus and Boeing being “way behind on their deliveries”.
O’Leary’s comments came after he met with Boeing Commercial Airplanes chief executive Stephanie Pope in Dublin in the past few days. His understanding from Pope is that Boeing does not expect the US government to impose such tariffs.
Still, O’Leary – whose airline has more than 330 aircraft on order from Boeing – notes that everyone is cautious about making predictions.
“None of us know,” he states. ”I don’t think people in the White House know what they are going to do next week or next month.”
Speaking on the same panel, Air France-KLM Group chief executive Ben Smith concurs that there are “a lot of unknowns” in the global economy today, describing the current environment as “worrisome times”.
Airbus chief executive Guillaume Faury told US news channel CNBC in February that the airframer could prioritise deliveries to non-US customers in the event of tariffs being applied to its products. He also noted that Airbus’s final assembly lines in the USA might give it some flexibility should duties be imposed by the US government.
Boeing does not have the equivalent production flexibility; all of its commercial aircraft are completed in the USA.
