8 May 2025
If you are covering the US-UK trade deal and its impact on the aerospace industry, please see the following comment from Matt Dorset, equity research analyst at Quilter Cheviot:
"The aerospace industry will have breathed a small sigh of relief today following confirmation of the trade deal agreed between the US and the UK. The industry has been faced with significant uncertainty since the introduction of President Trump’s tariffs given its diverse global supply chains and customers, and the new deal not only demonstrates a willingness from the US to climb down from its steep tariffs, but it is also seemingly the first of more trade deals to come.
"The explicit mention of aerospace in Lutnick’s comments will likely reassure businesses that the negotiation teams are cognisant of the significance this has for the industry and are willing to provide support.
"Rolls Royce is less exposed to tariffs than many of its aerospace peers given the higher local-for-local production and mitigating actions under its control. Indeed, in its recent trading update the business reiterated all guidance and the expectation that it will offset tariff impacts. That said, clearly it is a positive that Rolls Royce engines are now exempt from US tariffs with around 3% exposure to exports to the US.
"Likewise, the $10bn UK order for Boeing aircraft is supportive for the US commercial aircraft manufacturer. However, it is worth noting that Boeing is not suffering from a lack of demand, and already has an order back log greater than $500bn, nearly 8x the sales it generated in 2024. What is more significant is the special emphasis that aerospace is receiving in trade talks, and the likelihood that additional agreements will follow."
