GE CEO: Tariff War Raises Corporate Costs, Affects Engine Spare Parts Deliveries to China
Larry Culp, CEO of U.S. industrial giant
General Electric (GE), warned on April 22 that the tariff war would pose risks to supply chains, significantly increase operating costs in the aviation industry, and impact GE's delivery of spare engines and components to China. Culp revealed that he has called on the Trump administration to restore the long-standing duty-free treatment enjoyed by the aviation industry to mitigate the impact of tariffs.
As reported by the Financial Times on the 22nd, Culp told analysts during a conference call that GE would rely on price increases and other measures to reduce the impact of tariffs on its business, and he had urged U.S. President Trump and other government officials to reinstate the duty-free treatment that the aviation industry has long enjoyed.
"We have been fully supportive of the government's efforts to enhance U.S. competitiveness and revitalize U.S. manufacturing," Culp said. "However, it's easy to overlook the $75 billion trade surplus enjoyed by the aviation industry, an achievement largely due to the duty-free system we've had in place since 1979."
He disclosed that GE has urged the Trump administration to "recognize the advantages this duty-free policy brings to the United States and consider reinstating it."
Culp also expressed concern that trade conflicts could affect GE's delivery of spare engines and components to China.
Separately, Reuters reported on the 22nd that Culp, in an interview with the news agency that day, stated that during his meeting with Trump, he advocated for the re-establishment of a duty-free system for the aviation industry under the Civil Aircraft Trade Agreement.
He said the Trump administration had expressed "understanding" of GE's position. "I believe this is beneficial to the country and will continue to be so."
The Civil Aircraft Trade Agreement mentioned by Culp was reached in 1979. The United States, a key promoter, aimed to consolidate its export advantages in aviation manufacturing and reduce supply chain costs through the agreement. One of its core goals is to eliminate import tariffs on civil aircraft (including entire planes, engines, and components) and their maintenance services, remove non-tariff barriers (such as discrimination in technical standards), and promote the liberalization of the global aviation industry chain.
Reports note that Trump's trade war has brought the greatest uncertainty to the aviation industry since the COVID-19 pandemic, breaking the duty-free status the industry has enjoyed for decades and creating uncertainties in aircraft deliveries. This uncertainty has made it difficult for some of GE's customers to accurately predict their business conditions.
For this year, GE expects to incur an additional $500 million in tariff costs. Economic uncertainty caused by trade conflicts has impacted global travel demand. As people reduce travel spending, the risk of airlines cutting engine orders is increasing.
Meanwhile, U.S. aerospace supplier Howmet Aerospace also warned that tariffs could hinder the flow of goods.
GE has been grappling with supply chain challenges. Over the past year, GE's engine deliveries have declined. European aircraft manufacturer Airbus stated last week that CFM International, a joint venture between GE and France's Safran, has faced challenges in engine deliveries, with "production progress far behind the planned level."
Beyond GE, U.S. defense giants RTX and Northrop Grumman are also impacted by Trump's tariff policies.
RTX's stock price fell 9.8% on the 22nd. The company had previously warned that if the Trump administration's tariffs on steel, aluminum imports, and goods from China, Canada, and Mexico remain in effect until the end of the year, its pre-tax operating profit could suffer an $850 million loss.
On the same day, Northrop Grumman's stock price plummeted 12.7%, its largest single-day drop since 2008. According to its previously released earnings report, the company's first-quarter net profit nearly halved year-on-year to $481 million.
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