On April 2, the President signed an Executive Order imposing new tariffs on imports of all articles into the U.S. customs territory subject to certain exceptions. Then, on May 28, the U.S. Court of International Trade ruled imposition of tariffs exceeded the President’s “emergency” powers[1]. The Commerce Department is also pursuing an investigation under the Trade Expansion Act of 1962 to address the impact of imports of commercial aircraft, engines, and parts on our national security. These tariffs and trade shifts are affecting markets everywhere–learn how they’re impacting the aero and rail industries below.

The U.S. aerospace manufacturing industry has maintained the largest positive trade balance of any sector, roughly a $100 billion trade surplus in 2024.  It’s the largest manufacturing sector in the U.S. that exports more than it imports. Historically, the 1979 Agreement on Trade in Civil Aircraft eliminated tariffs and established a free trade zone among signatory nations for civil aircraft, engines, and flight simulators, which was meant to encourage global technological development. Because the industry’s supply chain is complex and highly regulated, the Administration’s shifting tariff policies have introduced uncertainty into U.S. Commercial Aviation equipment planning.  American aircraft manufacturing is complex, with parts sourced from around the world. The current tariff and trade landscape presents significant challenges. Tariffs not only affect direct costs but also impact market dynamics. U.S. trade policy is central to the aerospace sector’s growth success. In early May, Airbus CEO, Guillaume Faury, called for a return to tariff-free trading for the aerospace sector, and Boeing CEO, Kelly Ortberg, at a Congressional hearing last month testified the plane maker wanted free trade. Understanding this is crucial in the context of global aerospace markets. 

Boeing and Airbus delivered 359 aircraft through April 2025, a 17% increase year over year.  Both are under pressure to increase deliveries. Boeing delivered 45 commercial jets in April, four more than in March.  Airbus delivered 56 in April compared to the 71 they delivered in March. Through the quarter of the year, Boeing has delivered 175 aircraft, including 133 737 MAX, 21 787s, and 11 freighters. At the end of April, Boeing had 6,282 unfilled orders and an official backlog of 5,643 (after adjusting for accounting standards).  Comparatively, Airbus’ backlog represents 10.4 years of production based on 2025 production estimates. Boeing’s backlog would last approximately 11 years. Continuing tariff uncertainties and new equipment delivery delays support secondary market values of mid-life aircraft and influence decisions to extend leases (Aercap reported 99% utilization and 84% lease extensions in the first quarter of 2025).

The Bureau of Economic Analysis estimated U.S. GDP fell 0.3% in Q1 2025 from Q4 2024. U.S. rail volumes have remained stable: 1.13 million total carloads were originated in April, up 6.2% over April 2024 (the largest year-over-year percentage gain in 16 months and the third largest in nearly four years). Through the first four months of 2025, total carloads are up 1.8% over the same period last year, with 11 of 20 carload categories seeing gains[2]. The GDP contraction resulted from a surge in U.S. imports in Q1 2025 as businesses front-loaded shipments to beat the anticipated tariffs. Underlying domestic demand rose at a 3.0% annualized rate in Q1, pointing to continued momentum in the domestic economy. The North American railcar fleet and railcars in storage contracted slightly in April, driven by lower industry builds, an aging fleet, and attractive scrap rates. Overall fleet attrition is expected to continue to outpace new builds in 2025 (railcars in storage are below 19%). Pricing for new build rail rolling stock remains elevated due to higher steel prices and input price inflation supporting used rail rolling stock pricing. Above normal temperatures, rising power demands, and higher natural gas prices are driving the near-term outlook for coal (there was a year-over-year increase in carloads of coal in April, up 53,736 carloads, or 23.2%)[3].  

The “political” question of whether a “national emergency” exists that allows the tariffs the President has imposed under the 1977 International Emergency Economic Powers Act remains. Steady job growth, consumer spending, and expanding services continue to support economic activity. As markets shift, Rail and Aero equipment play central roles. Perfect information is seldom available. Staying informed is not optional; it’s essential. Explore opportunities. Call RESIDCO.

Glenn Davis 312-635-3161

davis@residco.com


[1] The tariffs may remain until the Supreme Court Rules.

[2] AAR Policy & Economics Rail Industry Overview, May 2025.

[3] Short-Term Energy Outlook, the U.S. Energy Information Administration.


0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *