[By Guancha Observer Network, Wang Yong; Edited by Zhao Qiankun]

The tariff policy of the Trump administration is impacting the global aviation industry. Boeing stated that 20% of its parts are imported and 80% of its aircraft are sold overseas, emphasizing that "free trade is crucial for Boeing." Airbus also mentioned that despite having a factory in the U.S., many components still need to be imported from Europe. The imposition of additional tariffs has led to increased corporate costs, which in turn raises operating costs for airlines. "These costs will ultimately be passed on to airlines and passengers. Since nearly 40% of the global airline fleet operates with leased aircraft, this cost increase will put upward pressure on ticket prices."

According to reports from The Wall Street Journal and Asia Travel Weekly Singapore, the "tariff war" between the U.S. and Canada has already had substantive effects on the aviation industry in February. A report released by an American aviation data company at the end of March showed that advance bookings on routes between the U.S. and Canada have plummeted by over 70% compared to the same period last year. Monthly booking declines for May through September were between 71.4% and 72.2%.

Passengers at an airport in the U.S., The Wall Street Journal

Gad Alon, a professor at the Wharton School of the University of Pennsylvania, said that the supply chain for aircraft manufacturers is extremely complex. A commercial aircraft contains over two million parts, many of which come from Europe and Asia. Retaliatory tariffs from various countries will increase the cost of critical components such as avionics, landing gear, and engines by 5% to 10%, which equates to an additional $3 to $5 million per aircraft.

Alon noted that the longer the tariffs persist, the more disruptions there will be in the aviation manufacturer's supply chain. This is because procurement contracts need to be renegotiated or alternative sources found when they expire. This will lead to delays in the delivery of key components and new aircraft, especially as travel demand continues to grow. Many airlines, to meet market demands, are forced to expand their fleet sizes by leasing aircraft, causing rental fees to rise by 8% to 12%, and ticket prices to increase by 2% to 4% accordingly.

The aforementioned media reports mentioned that the Trump administration's escalating tariff measures have exacerbated turbulence in the global trade and aviation markets. Interest from Canadian and European travelers in flights to the U.S. has weakened, affecting industries such as cruises, hotels, and aviation. Air Canada stated it is cutting cross-border capacity. Additionally, concerns about economic recession have caused consumer confidence in the U.S. to fall to its lowest point in four years, with the most worrying aspect being that global economic connections are being severed.

The CEOs of America’s four major airlines (United Airlines, American Airlines, Delta Air Lines, and Southwest Airlines) all stated that passenger demand this quarter is slowing down. American Airlines, Delta Air Lines, and Southwest Airlines have already lowered their first-quarter profit forecasts.

Delta Air Lines stated, "Consumer confidence is weakening, and air travel is reducing reservations."

A Delta Air Lines flight is landing. CNBC

United Airlines announced plans to retire 21 aircraft early to reduce costs, stating that government-related business volume has dropped by 50%, and this weakness is spreading to the domestic leisure travel market.

Terry Dale, president and CEO of the U.S. Travel Association, recently stated that in the short term, tariffs may discourage foreign tourists from coming to the U.S. and affect the image of American tourists abroad. In the long term, tariffs raise the prices of goods, weaken consumer purchasing power, making non-essential expenditures like tourism harder to afford. Additionally, tariffs increase hotel, airline, and cruise operational costs, further squeezing industry profit margins.

Dale pointed out that import prices for leisure-related goods (such as beverages) may continue to rise, which will have a chain effect on restaurants and entertainment venues.

According to a recent report by the Financial Times, the tariff policies of the Trump administration are driving up the retail price of coffee beans and the price of coffee drinks. As the main coffee importing country for the U.S., Vietnam, Indonesia, Colombia, and Brazil are currently subject to tariffs ranging from 10% to 46%; Côte d'Ivoire (a major cocoa-growing nation for chocolate production) is also subject to a 21% tariff. Global coffee companies and chocolate manufacturers, including Starbucks, are under increasing pressure. Starbucks stated, "Consumption terminals already under pressure will face higher cost expenditures, with significant impacts on channel development and revenue profits. As of April 3, Starbucks' stock price fell by more than 11%."

Dale said, "In the current context where the global trade landscape has changed significantly, it is difficult to predict the extent of impact on the industry, but it can be certain that the tariff policies of the Trump administration have had a highly negative impact on global air travel, particularly on the aviation and tourism sectors in the U.S."

This article is an exclusive contribution by the Guancha Observer Network and cannot be reprinted without permission.

Original source: https://www.toutiao.com/article/7490867750735217179/

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