RTX, GE Aerospace Face Over $1 Billion Tariff Impact

Introduction to Tariffs and Their Impact

Men work with a jet engine at General Electric (GE) Celma, GE’s aviation engine overhaul facility in Petropolis, Rio de Janeiro, Brazil. RTX and GE Aerospace expect a more than $1 billion impact combined from President Donald Trump’s tariffs on imported goods and materials, the latest sign of higher prices for major U.S. manufacturers that rely on a global supply chain.

The Estimated Impact of Tariffs

Neil Mitchill, chief financial officer of defense contractor and commercial aerospace supplier RTX, said on an earnings call Tuesday that the company will likely take a $850 million hit this year from tariffs, including the sweeping 10% levies that Trump imposed earlier this month alongside higher duties on countries like China and separate taxes on imported steel and aluminum. That estimate doesn’t include RTX’s own tariff mitigation measures, Mitchill said.

GE Aerospace’s Response to Tariffs

GE Aerospace, which makes engines for popular Boeing and Airbus planes, kept its 2025 earnings outlook in place during its quarterly report Tuesday and said it would seek to save about $500 million by cutting costs and raising prices. GE Aerospace CEO Larry Culp said on Tuesday’s analyst call that he recently met with Trump and discussed the U.S. aerospace sector’s trade surplus. GE has a joint venture with France’s Safran to make popular airplane engines.

The Shift in Global Trade

The new tariffs are a shift for a global industry that has enjoyed mostly duty-free trade for decades. "All we have suggested is the administration works through a myriad of issues, is they can consider the position of strength that the country enjoys as a result of this tariff-free regime," Culp said. The White House didn’t immediately comment.

Impact on the Airline Industry

Boeing, a major customer of both companies and the top U.S. exporter, is scheduled to report quarterly results before the market opens on Wednesday. Airlines have recently announced cuts to U.S. domestic capacity plans this year because of softer demand, but executives have emphasized it is hard to predict the direction of the economy or future trade policies. United last week provided two earnings outlooks for 2025, one in the event of a recession, one assuming status quo.

Uncertainty in the Market

"There is uncertainty," Culp said Tuesday. "None of us, I think, know for sure how this plays out." This uncertainty is reflected in the cautious approach taken by airlines and manufacturers, as they navigate the changing landscape of global trade.

Conclusion

The imposition of tariffs on imported goods and materials is expected to have a significant impact on major U.S. manufacturers, including RTX and GE Aerospace. The estimated impact of over $1 billion combined is a significant concern for these companies, and they are taking steps to mitigate the effects of the tariffs. However, the uncertainty surrounding the future of global trade makes it difficult to predict the outcome, and companies are taking a cautious approach to navigate this changing landscape.

FAQs

Q: What is the estimated impact of tariffs on RTX and GE Aerospace?
A: The estimated impact of tariffs on RTX and GE Aerospace is over $1 billion combined.
Q: How do the tariffs affect the airline industry?
A: The tariffs are expected to lead to higher prices for airlines, which may result in cuts to domestic capacity plans and changes to earnings outlooks.
Q: What is the response of GE Aerospace to the tariffs?
A: GE Aerospace plans to save about $500 million by cutting costs and raising prices.
Q: What is the level of uncertainty in the market?
A: There is a high level of uncertainty in the market, with companies and executives unsure of how the tariffs will play out and what the future of global trade will look like.