Boeing Caught In A 787-Sized Problem As Tariffs Cause Turbulence

Boeing Co BA just found itself in a high-altitude storm as newly announced tariffs add turbulence to its already complex supply chain. JPMorgan analyst Seth M. Seifman warns of “increased risk to estimates and multiples,” as rising costs and potential trade retaliation threaten the aerospace giant's outlook.

Supply Chain Headwinds: A 787-Sized Problem?

Boeing's exposure to global suppliers is significant, particularly on its widebody jets like the 787 Dreamliner. Components from Italy's Leonardo and Japan's Mitsubishi, Kawasaki, and Fuji contributed an estimated $1.8 billion in sales to Boeing last year.

With tariffs now looming, Seifman notes that Boeing may be forced to absorb higher costs or pass them onto customers, neither of which is ideal.

While Boeing has already flagged supply chain disruption as a major risk, there is a silver lining: Aluminum and steel – two common tariff targets – only account for around 2% of an aircraft's average cost, potentially limiting the immediate impact.

Retaliation Risks: Boeing In The Trade War Crosshairs

As America's top manufacturing exporter, Boeing is a prime target if countries retaliate against U.S. tariffs. While Boeing could redirect deliveries to domestic buyers, this is only a temporary fix. China, which accounts for 20% of global aircraft demand over the next two decades, remains a long-term concern. A resurgence of U.S.-China tensions could see Boeing dragged into the geopolitical dogfight once again.

That said, Boeing benefits from the industry's duopoly structure – Airbus SE EADSF EADSY may be the only alternative, but it's already booked out for years on key models. Airlines reluctant to switch may choose to ride out the tariffs rather than disrupt their fleet plans.

For now, Boeing investors should watch for clarity on exemptions, cost pass-through strategies, and potential supply chain shifts.

While short-term risks remain, Seifman suggests that long-term industry fundamentals still favor Boeing – assuming tariffs don't turn into a full-blown trade war.

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