RTX and GE Aerospace Face Over $1 Billion in Tariff Costs by 2025 Due to Trump-Era Trade Policies

RTX and GE Aerospace anticipate a combined financial impact of over $1 billion in 2025 due to tariffs from President Trump's trade policy. RTX expects an $850 million hit, while GE Aerospace faces a $1 billion exposure, planning to offset $500 million through cost-cutting and price increases. These figures were disclosed during their Q1 2025 earnings calls on April 22. The tariffs, affecting global supply chains, pose significant challenges for U.S. manufacturers, with RTX and GE Aerospace among the first to quantify the financial toll.

RTX Projects $850 Million Tariff Impact

RTX, the parent company of Collins Aerospace and Pratt & Whitney, revealed that it could face an $850 million reduction in operating profit this year due to a range of tariffs. The estimate, disclosed by Chief Financial Officer Neil Mitchill during the company’s Q1 2025 earnings call, includes the effects of mitigation strategies already in place.

The breakdown of the projected tariff impact includes:

• $250 million from tariffs on imports from Canada and Mexico
• $250 million from tariffs on Chinese goods
• $300 million from global reciprocal tariffs
• $50 million from U.S. steel and aluminum import duties

These figures are based on current tariff levels and assume no further escalation. Mitchill noted that the actual cash flow impact could be higher due to delays in receiving duty refunds. RTX CEO Chris Calio emphasized the uncertainty surrounding the situation, stating that the company has not updated its full-year guidance to reflect the tariff impact because “the situation remains fluid.”

The company’s commercial segments—Collins Aerospace and Pratt & Whitney—are expected to bear the brunt of the costs, with each absorbing approximately $400 million. The defense-focused Raytheon unit is largely insulated from the tariff effects.

Despite the looming cost pressures, RTX reported strong first-quarter results. Sales rose 5% year-over-year to $20.3 billion, and adjusted earnings per share increased 10% to $1.47. Operating profit for the quarter reached $2.04 billion, up from $1.87 billion in the same period last year.

GE Aerospace Eyes $1 Billion Exposure, Plans $500 Million in Offsets

GE Aerospace, the world’s largest jet engine manufacturer, also addressed the tariff issue during its Q1 2025 earnings call. CEO Larry Culp said the company faces a potential $1 billion exposure from the new trade measures but is actively working to mitigate half of that amount.

“We are optimizing operations and leveraging existing programs and strategies to reduce the impact from tariffs,” Culp said. “Additionally, we are taking measures to control cost and implementing pricing actions.”

The company is utilizing foreign trade zones, duty drawback programs, and a newly introduced “tariff surcharge” on customers to help offset the financial burden. CFO Rahul Ghai noted that while the surcharge is not intended to be permanent, it is a necessary step to protect margins in the current environment.

GE Aerospace reaffirmed its full-year guidance, projecting adjusted earnings per share between $5.10 and $5.45 and low double-digit revenue growth. The company reported a strong first quarter, with revenue rising 10.9% to $9.94 billion and adjusted earnings per share of $1.49, beating analyst expectations.

Culp also disclosed that he recently met with President Trump to advocate for a return to the tariff-free regime established under the 1979 Civil Aircraft Agreement. “All we have suggested is that the administration consider the position of strength the country enjoys as a result of this tariff-free regime,” he said.

Industry-Wide Implications

The tariff-related disclosures from RTX and GE Aerospace underscore the broader challenges facing U.S. manufacturers that rely on global supply chains. The aerospace sector, in particular, has historically benefited from duty-free trade, allowing companies to source components and materials from around the world without incurring additional costs.

The reintroduction of tariffs—especially the sweeping 10% levy on all imports and targeted duties on countries like China—has disrupted this model. RTX and GE Aerospace are among the first major manufacturers to quantify the financial toll, but the ripple effects are likely to extend across the industry.

GE Aerospace’s customers, including major airlines and aircraft manufacturers, are already feeling the pressure. Some airlines have scaled back capacity plans and issued cautious outlooks due to trade-related uncertainty. Suppliers like Howmet Aerospace have also warned of potential shipment disruptions if tariffs remain in place.

Despite these headwinds, both RTX and GE Aerospace remain committed to their long-term strategies. RTX continues to focus on operational efficiency and global market expansion, while GE Aerospace is leveraging its $140 billion commercial services backlog to maintain financial stability.

References

• RTX Reports Q1 2025 Results
• GE Aerospace and RTX warn tariffs will inflate 2025 costs, eye ‘tariff surcharge’
• GE Aerospace CEO Culp advocates tariff-free regime for aviation industry
• RTX, GE Aerospace expect more than $1 billion tariff impact
• Here's How RTX Shocked the Market Today (Hint: It's Tariff Related) | The Motley Fool
• GE Aerospace Q1 2025 Earnings Beat Estimates, Company Reaffirms Outlook Despite Trump Tariff Threat
• | InsideDefense.com