[Source/Observation Network by Liu Chenghui] Trump's tariff policy continues to disrupt the global trade pattern, bringing great uncertainty to the aviation industry.

Larry Culp, CEO of the American老牌 industrial giant General Electric (GE), warned on April 22 that the tariff war would bring risks to the supply chain, significantly increase the operating costs of the aviation industry, and affect GE's delivery of spare engines and parts to China. Culp revealed that he had called on the Trump administration to restore the tax-exempt treatment enjoyed by the aviation industry for a long time to mitigate the impact of tariffs.

According to a report by the Financial Times on April 22, Culp told analysts in a conference call that GE will rely on price increases and other measures to reduce the impact of tariffs on its business. He has urged President Trump and other government officials to restore the tax-exempt treatment enjoyed by the aviation industry.

General Electric CEO Larry Culp Video screenshot

"We have always fully supported the government's efforts to enhance America's competitiveness and revitalize American manufacturing," Culp said. "However, it is easy to overlook the $75 billion trade surplus enjoyed by the aviation industry, an achievement mainly due to the tax-free system we have implemented since 1979."

He revealed that GE has urged the Trump administration to "recognize the advantages this tax-free policy brings to the United States and consider restoring this system."

Culp also expressed concern about the impact of trade conflicts on GE's delivery of spare engines and parts to China.

In addition, according to a Reuters report on April 22, Culp told the media in an interview that he had advocated re-establishing a tax-free system for the aviation industry based on the Civil Aircraft Trade Agreement during his meeting with Trump.

He said that the Trump administration understood GE's position. "I think it is beneficial to the country and will continue to be so."

The Civil Aircraft Trade Agreement reached in 1979, as a major promoter, aims to consolidate America's advantage in aviation manufacturing exports while reducing supply chain costs. One of its core goals is to eliminate import tariffs on civil aircraft (including complete aircraft, engines, parts) and their maintenance services, remove non-tariff barriers (such as discriminatory technical standards), and promote the liberalization of the global aviation industry chain.

The report pointed out that Trump's trade war brought the greatest uncertainty to the aviation industry since the pandemic, breaking the tax-free status enjoyed by the industry for decades and causing uncertainty in aircraft deliveries. This uncertainty makes it difficult for some of GE's customers to accurately predict the company's business conditions.

November 2023, Shanghai, the sixth CIIE technology equipment exhibition, General Electric's engine structure model displayed. Visual China

This year, GE is expected to incur an additional $500 million in tariff costs. The economic uncertainty caused by the trade conflict has affected global travel demand. As people reduce their travel expenses, the risk of airlines cutting engine orders is increasing.

Meanwhile, the American aerospace supplier Howmet Aerospace also issued a warning that tariffs may hinder the flow of goods.

GE has been addressing challenges in the supply chain. In the past year, GE's engine delivery volume has decreased. Last week, European aerospace company Airbus said that CFM, a joint venture between GE and French company Safran, was facing challenges in delivering engines, with production schedules far behind planned levels.

Besides GE, American defense giants Raytheon (RTX) and Northrop Grumman are also facing the impact of Trump's tariff policies.

Raytheon's stock fell 9.8% on April 22. Previously, the company warned that if the tariffs on steel, aluminum imports, and goods from China, Canada, and Mexico continued to be effective until the end of the year, its pre-tax operating profit might suffer an $850 million loss.

On the same day, Northrop Grumman's stock plummeted 12.7%, marking the largest single-day drop since 2008. According to previously released financial reports, the company's net profit in the first quarter was almost halved to $481 million year-over-year.

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Original source: https://www.toutiao.com/article/7496389875991462419/

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