REFILE-UPDATE 2-Aerospace walks trade tightrope as EU mulls tariff response
03/04/2025, 19:59:30.4870000
Associated keywords:
- AIR.PA
- BA.N
- RR.L
- MTXGn.DE
- GE.N
*
US tariffs include 20% on EU where Airbus is based
*
French aerospace urges proportionate and assertive
response
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France and US cooperate on engines as they compete on
aircraft
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Ryanair warns of higher fares
By Tim Hepher, Allison Lampert, Joanna Plucinska, Dan
Catchpole
PARIS, April 3 (Reuters) - Aerospace firms sought to
contain a minefield of pressures on Thursday after an Airbus-led
AIR.PA body urged the European Union to hit back against U.S.
President Donald Trump's tariffs and one of Europe's biggest
airlines warned of higher fares.
Aircraft, engines, spare parts and components from landing
gear to seats face higher costs and planning for the peak summer
travel season could be disrupted as Brussels mulls a response,
industry experts warned.
"It will be chaos. It creates massive demand uncertainty as
airlines plan their network schedules," Rob Morris, global head
of consultancy at UK-based Cirium Ascend, said.
Trump on Wednesday imposed sweeping tariffs on U.S. imports
including 20% on EU goods and 10% on imports from Britain, home
to engine maker Rolls-Royce RR.L .
The move went further than many investors and executives
had expected, rattling a $150 billion-a-year jet industry that
is an important contributor to the global economy.
Dominant planemakers Airbus, headquartered in France, and
its U.S. rival Boeing BA.N have been a lightning rod for trade
tensions for years, waging a subsidy dispute at the World Trade
Organisation led by their governments for 17 years until a
five-year truce was declared in 2021.
But with supply chains still not fully recovered from the
COVID-19 pandemic, insiders say both companies are reluctant to
put fragile efforts to rebuild the industry at risk by fuelling
a wider trade war.
France's aerospace industry has written to the European
Commission calling for "proportionate and assertive"
countermeasures if the new U.S. tariffs cause significant
damage, a person familiar with the matter said.
But the appeal from the country's powerful Gifas aerospace
lobby, whose rotating presidency is held by Airbus, also calls
for any retaliation to be fine-tuned so as to avoid hurting
European companies that rely heavily on U.S. imports.
Gifas did not respond to a request for comment. The European
Commission referred to a statement by its president Ursula von
der Leyen, who said the EU was prepared to respond with
countermeasures if talks with Washington failed.
The tone of the letter - juggling retaliation with softening
the impact on local importers - reflects France's position at
the centre of an interlocking supply chain for jets and engines.
Analysts said it seemed aimed in part at tempering the impact of
tariffs on the engine industry, which relies as much on
transatlantic cooperation as the planemakers thrive on rivalry.
PRICE WARNING
Toulouse-based Airbus is France's second-biggest exporter
after the agri-food sector and vies for sales with Boeing.
But France also sits at the heart of the world's largest
engine maker by volume, CFM International, a 50-year-old
transatlantic venture that has stayed below the trade radar.
Co-owned by France's Safran SAF.PA and GE Aerospace
GE.N , CFM is among the biggest suppliers to Airbus and Boeing.
Airbus is also a major customer of Pratt & Whitney, the
engine maker owned by U.S. aerospace group RTX RTX.N , which in
turn cooperates closely with Germany's MTU MTXGn.DE .
Boeing, meanwhile, imports some engines from Rolls-Royce as
well as European parts for the engines on its 777 jet.
None of the companies had any comment on tariffs.
Analysts said any tariffs would feed into all airplane
costs via engine supply chains, even without an expected EU
response.
"If tariff wars spread to aircraft or aircraft parts, then
clearly it will lead to higher costs for our airline and higher
fares for our customers," Michael O'Leary, CEO of budget giant
Ryanair RYA.I , told Ireland's Newstalk Breakfast.
Jetmakers had previously seemed confident that planes would
be left out of the new trade conflict, with O'Leary declaring
tariffs unlikely after meeting a top Boeing executive last week.
Boeing CEO Kelly Ortberg told a Senate panel hours before
Wednesday's announcement that it was important Boeing did not
"get in a situation where certain markets become closed to us."
Boeing typically delivers 17% of its jets to Europe while
Airbus delivers some 12% to the United States, some of which are
assembled locally, according to Boeing and Cirium data.
(Reporting by Tim Hepher, Allison Lampert, Joanna Plucinska, Dan
Catchpole. Editing by David Evans, Mark Potter and Nia
Williams)
((mailto:tim.hepher@thomsonreuters.com; +33 1 49 49 54 52;
Reuters Messaging: rm://tim.hepher.thomsonreuters@reuters.net/))
RTRS