**London:** Airbus CEO Guillaume Faury outlines efforts to manage evolving US-China tariffs by adapting supply chains, engaging airline customers, and leveraging legal tools, while awaiting clarity on China’s tariff stance amid potential impacts on operations in Mobile and Tianjin.
Airbus is actively evaluating strategies to navigate the complex landscape of tariffs influenced by US policies. During a briefing on 30 April, chief executive Guillaume Faury discussed the company’s ongoing efforts in both managing its supply chain and engaging in negotiations with affected airline customers. The backdrop of these discussions is a rapidly evolving tariff regime that has left the aerospace giant in a state of uncertainty regarding the potential impacts on its operations.
Faury highlighted that Airbus is still awaiting clarity on whether China would ease its tariffs on imported US aerospace components. In an effort to mitigate the effects of the tariffs, he stated, “As we progress on our assessments, we’re identifying the means to adapt and mitigate the impact by leveraging our industrial set-up as well as our strong and diversified backlog.” This indicative remark reflects the company’s proactive stance in addressing potential cost increases associated with imported subassemblies, particularly those shipped from Europe to Airbus’s final assembly lines in Mobile, Alabama, and from the US to its facility in Tianjin, China.
The chief executive underscored the unpredictable nature of the tariff situation, characterising it as “literally changing by the day.” He speculated that should China lift its tariffs, the consequences for operations in Tianjin could be “relatively limited” or “close to nil.” Nevertheless, he maintained that the company had yet to factor tariff effects into its full-year financial guidance.
Faury noted that while the direct financial exposure from tariffs is manageable, there are concerns about potential indirect effects, particularly those that could emerge over time as tariffs might impact air traffic. He remarked, “As of now we’ve not experienced any change in our supply-chain performance,” but acknowledged that each supplier faces a unique situation. He elaborated on this point, stating that there have been “as many reactions [to tariffs] as number of suppliers,” indicating a varied response across the industry.
The chief executive also expressed caution about the challenges Airbus faces related to its customers. Faury remarked, “Nobody wants to pay the additional cost,” with reference to the increased expenses associated with importing new aircraft. While there is no tariff for aircraft manufactured in Mobile for US customers, those imported from Europe incur a duty.
Amid these complications, Faury pointed out that Airbus is employing a strategy reminiscent of those implemented during previous tariff challenges from the World Trade Organization, indicating a focus on export opportunities to markets outside of the USA. He also discussed arrangements with airlines and their partners to navigate the current situation. “Sometimes we’re in a situation where the airline ends up accepting to pay the import duties to the US administration to be able to import [aircraft],” he stated.
Faury mentioned the availability of various legal mechanisms that could alleviate the cost burden on imports, contingent upon factors such as the US content of the product and its destination. These options may provide short-term solutions to mitigate the financial impact.
Looking further ahead, Faury acknowledged that persistent tariffs could have substantial long-term consequences on the US aerospace industry, as they would impose significant additional costs on businesses reliant on imported components and systems. He expressed a desire to see a return to the zero-tariff status on civil aerospace goods, a situation established by a World Trade Organization agreement in 1979 which eliminated tariffs on civil aircraft and their components.
“I don’t see a change in nature in the discussion with customers, beside managing the tariffs themselves on the short term,” he noted, conveying a sense of cautious optimism regarding future negotiations. Faury articulated his hope for a resolution that would restore the previous tariff arrangements, although he acknowledged that the timeline and means for achieving this remain uncertain.
Source: Noah Wire Services
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