The Boeing logo is seen on a Boeing 787 Dreamliner airplane in Long Beach, California. Picture: REUTERS
The Boeing logo is seen on a Boeing 787 Dreamliner airplane in Long Beach, California. Picture: REUTERS

New York — President Donald Trump’s plan to slap tariffs on imported steel and aluminium would barely budge the price of a Boeing jetliner or fighter aircraft, belying fears of a big blow to US industry, aerospace analysts said.

What could have an effect is retaliation by countries such as China, one of Boeing’s biggest customers, if the US goes through with threats to tax imported steel by 25% and aluminium by 10%, they said.

Boeing makes its aircraft only in the US, but nearly 70% of the 763 jetliners delivered in 2017 went to customers outside the US and 22% to China.

Aluminium makes up 80% of the weight of older-model aircraft such as the 737 and 777 but only about 12% of the cost, according to experts.

A 10% aluminium tariff would increase the cost of an aircraft by about 1.2% if all of the aluminium was imported. But most of the aluminium Boeing uses was domestically produced, experts said.

Eric Redifer, a director in the aerospace practice of industry consulting firm AlixPartners, and others estimate only 25%-30% is imported, leaving a net impact of about 0.3% of an aircraft’s cost.

Prices of domestic aluminium are likely to rise if tariffs are imposed. On a mid-sized 737, with a list price of $117.1m, the cost increase could be less than $200,000, because airlines often receive discounts of 40% off list price, and Boeing’s profit margin is about 10%.

The net effect for steel is similar, even though it made up less of a typical Boeing aircraft, said Kevin Michaels, aerospace manufacturing expert at AeroDynamic Advisory.

He estimated Trump’s 25% tariff on relatively pricey steel would cost US aerospace companies less than $100m, roughly on par with the overall impact on aluminium.

That means the tariffs would add $150m-$200m in cost, or at most about 0.2% of $100bn worth of business jets, jetliners and military aircraft US firms make each year.

For Boeing’s newer 787, which uses carbon-fiber composite for wings and fuselage, the impact is even less. Aluminum makes up 10% of the cost, Redifer said. The result: Trump’s aluminum tariff would increase 787 costs about 0.09%. "What will have a material impact is if China retaliates," said Richard Aboulafia, aerospace analyst at the Teal Group in Fairfax, Virginia. "They are openly searching for ways to express their displeasure and apply leverage. And it doesn’t get any more obvious that going from Boeing to Airbus." The country’s thirst for jets is so great, however, that it likely will need planes from both Boeing and European rival Airbus to keep up with demand, analysts said.


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