WASHINGTON — Critics of President Trump’s proposed actions on steel and aluminum imports warn that the tariffs could make U.S. aviation and space products more expensive and invite retaliation from partner countries.
Fierce opposition to the tariffs from the aerospace industry did not deter the president, who argued that a 25 percent tax on steel imports and a 10 percent tax on aluminum imports are justified “for national security reasons.”
The organization that represents satellite manufacturers, the Satellite Industry Association, has not yet commented on the tariffs. “We will be meeting with members late Monday” to discuss the matter, association spokesman Dean Hirasawa told SpaceNews.
Satellite production and services are inherently international businesses, and space vehicle manufacturers depend on imported metals to make their products. On its website, SIA says one of its mission is to “promote fair market access for the provision of satellite services and trade in satellite equipment globally.”
Aerospace Industries Association President and CEO Eric Fanning has blasted the tariffs as detrimental to U.S. manufacturers. To remain competitive internationally “the commercial side of our industry requires global sources of aluminum and steel,” Fanning wrote in a letter to Trump last week. Industry analysts predict a 10 percent tariff on aluminum would create almost $2 billion in unnecessary costs to U.S. manufacturing, he noted. For aerospace and defense supply chain companies, increased costs from aluminum and steel tariffs affecting commercial products could also impact revenue.
“If these proposed policies are implemented, there is a risk of trade retaliation on aerospace and defense products, which are the consistent source of America’s largest manufacturing trade surplus,” Fanning stated. “If these exports become too expensive to compete for market share, we lose benefits from initial sale and ongoing sales of parts, and components critical for maintenance, repair and overhaul.”
On behalf of aerospace firms, “we respectfully ask you to reconsider imposing tariffs on aluminum and steel imports and to work with us to identify alternative remedies to concerns about U.S. aluminum and steel production capacity,” wrote Fanning.
Defense Secretary Jim Mattis has acknowledged that securing the domestic supply of aluminum is a national security issue, but he also said that the domestic supply of this vital material is not currently under threat, Fanning noted.
Even if the White House agrees to review the issue and consider exemptions to the tariffs, the uncertainty and confusion “could slow things down” and result in added costs, Fanning said last week in an interview with Vago Muradian, of Defense & Aerospace Report.
“The real concern we have is retaliation,” Fanning said. The aerospace and defense industry is the largest contributor in the manufacturing sector to a U.S. trade surplus of $86 billion a year. If countries decide to retaliate against these tariffs, “it could really dry up the market for some of these products.”
Fanning cautioned that the commercial space business could be affected in a major way. On the defense side, aluminum and steel are sourced domestically. “On the commercial side, they go where they can get the best prices, the materials that they need.”
AIA advocates for the domestic space industry as “crucial to our nation’s economic vitality and security,” the association said in a report last year. The industry generates “export revenues and high technology jobs for our citizens, while underpinning our security in ways that are seldom understood by the public.”
Fanning told Muradian that he intends to keep up the fight. “The last time this happened in 2002 studies showed that more jobs in the economy were lost overall than existed entirely in the steel industry,” he said.
A former secretary of the Army and undersecretary of the Air Force during the Obama administration, Fanning has been deeply involved in industrial base debates. He noted that the supply chain from raw materials “all the way through manufactured goods is international. It’s intertwined. It’s impossible to unwind that at this point.” Industrial alliances bolster national security, he said. “When someone makes the argument that we need to do this for national security reasons … it is a concern because I think this is going to have negative repercussions on alliances, on relationships, on trust in the United States, and is going to disrupt that supply chain that is global.”
Trump said on Friday he would exempt Canada and Mexico from the tariffs and would consider a waiver for Australia. Japan, South Korea, the European Union and Brazil, which supply metals to the United States, indicated they would seek relief as well.