Boeing—often cited as one of the largest U.S. exporters—on Wednesday reported a reduced net loss of about $31 million, owing to an 18 percent year-over-year increase in revenue driven by an uptick in commercial deliveries. Its commercial aircraft business delivered 130 aircraft in the first quarter of 2025, up from 83 one year prior.

On the manufacturer’s earnings call, CEO Kelly Ortberg said the goal remains to ramp up 737 Max production to 38 aircraft per month, with plans to eventually return to a pre-COVID rate of 52 per month.

“With the current cash balance and the production ramp status, I feel we are well on our way to stabilizing the business—even in the face of the tariff situation,” Ortberg said.

However, Ortberg acknowledged that the administration’s fluctuating tariff regime poses challenges with deliveries to China—which already has returned several jets. The Boeing CEO said he and Airbus boss Guillaume Faury would both “welcome a non-tariff environment,” echoing comments made by GE Aerospace CEO Larry Culp on Tuesday.

“The only region that we have an issue with aircraft delivery today is China,” Ortberg said. “And due to the tariffs, many of our customers in China have indicated they will not take delivery.”

Ortberg said Boeing “didn’t really see any impact” from the trade war in the first quarter. But if the situation holds, the manufacturer may need to reroute some 50 aircraft it plans to deliver to Chinese customers this year—worth about $1 billion, per chief financial officer Brian West. About 7 in 10 of its commercial deliveries are slated for customers outside the U.S., and China comprises about 10 percent of its commercial backlog.

“If necessary, we have the ability to assign those [China-bound deliveries] to other customers,” Ortberg said. “It’s an unfortunate situation, but we have many customers who want near-term deliveries, so we plan to redirect the supply to the stable demand. And we’re not going to continue to build aircraft for customers who will not take them.”

Ortberg later added: “This is really going to be just a short-term challenge for us to either have China reverse course and take the airplanes, or get ourselves in a position to remarket those airplanes…But having said that, look, I can’t predict where this is going to go.”

U.S. aerospace firms have enjoyed decades of free trade since the Civil Aircraft Aviation Agreement took effect in 1980. The deal required signatories to lift all tariff barriers on civil aircraft, engines, flight simulators, and other key components.

“Given our position as a significant U.S. exporter, free trade policy across commercial aerospace remains very important to us,” said Boeing’s West. “If tariff-related impacts expand beyond China, we would expect to see additional pressure.”

Free-flowing trade has allowed the aerospace industry to build one of the largest trade surpluses of any U.S. sector, estimated at more than $75 billion. But if retaliatory tariffs begin to affect aircraft deliveries, that gap could narrow or even disappear.

“Aircraft are such a significant part of our trade surplus,” said Ortberg. “And if we see markets closing, that’s going to be a big challenge for us.”

Less of a concern for Boeing are import costs. Ortberg said the manufacturer is paying a 10 percent duty on “significant structures” for its widebody planes provided by suppliers in Japan and Italy. But under a duty drawback program, those costs could be recouped when the aircraft are exported.

Since much of Boeing’s supply chain is domestic, West estimated the net annual impact of tariffs on import costs at $500 million: “Nothing to worry about,” he said. Still, the situation is not ideal.

“I hope over time that these tariffs can be resolved through negotiated agreements, but until that happens, we will have to manage our way through these increased input costs,” said Ortberg. “I don’t think a day goes by where we aren’t engaged with someone in the administration, including cabinet secretaries and up to [Trump] himself.”

Ortberg said tariffs had an “immaterial” effect on manufacturing costs in Q1—with the caveat that its earnings results reflect only tariffs enacted before March 31. He added that the “China situation” could undo some of the progress made with first-quarter commercial deliveries.

“We need to execute on the production rate increases, and we need more clarity on China and tariffs more broadly,” Ortberg said.

Ortberg and GE Aerospace’s Culp are far from the only industry leaders to speak about the impact from tariffs. Airlines, air cargo operators, suppliers, and aftermarket service providers all face a potential ripple effect from trade barriers, Liz Hempel, partner at McKinsey, told FLYING.

“Rising costs will affect both the production of new aircraft and ongoing maintenance, which relies on original manufacturer parts,” Hempel said. “While some aviation companies may absorb the impact, others may be forced to pass it on—potentially raising costs for operators and travelers alike.”

Richard Barnett, chief marketing officer for supply chain intelligence platform SupplyFrame, echoed Hempel’s remarks.

“Aerospace supply chains are among the most complex and globally dispersed of any industry, making them highly vulnerable to trade disruptions,” Barnett said. “A single bottleneck—whether geopolitical, regulatory, or logistical—can cascade across programs and delay production timelines significantly.”

For example, Mark Burns, president of Gulfstream Aerospace, said the manufacturer’s supply chain includes nodes in Mexico, West Europe, and Asia. He said Gulfstream is “not troubled” by the tariffs but is working to get on the same page as the White House as it ramps up G700 and, soon, G800 deliveries.

“We want to make sure [the administration] understands the facts as we see it,” Burns told FLYING.

Delta Air Lines CEO Ed Bastian last week said the airline simply will not pay tariffs on the more than 20 Airbus models it expects to receive this year. And Howmet Aerospace, a producer of components for jetliners, has declared force majeure, threatening to halt shipments if forced to pay import duties.

Other defense sector firms—such as Lockheed Martin and Northrop Grumman—are not as worried. RTX, though, believes it will take an $850 million hit this year from tariffs alone.

Air cargo is another potential casualty due to e-commerce duties on imports from countries such as China. Aerospace cargo won’t be directly affected. But a downturn in air freight, Barnett said, could “squeeze capacity, shift cost structures, and influence prioritization across logistics providers.” Already, there are harbingers of such a slowdown—the International Air Transport Association (IATA) in March reported a decline in global air cargo demand, the first since mid-2023.

Among the most protected from tariff impacts are Tier 1 suppliers and large OEMs, which can weather disruptions with inventory stockpiles and massive coffers—lower-tier suppliers will bear the brunt of the impact. Eventually, though, shockwaves could travel up the supply chain.

“Aerospace companies are taking reshoring seriously, especially for critical systems and components,” Barnett said. “However, reshoring isn’t easy. It demands rebuilding domestic supplier capacity, retraining labor, and overcoming cost disparities compared to low-cost regions. It’s a multi-year journey requiring strong public-private collaboration.”

Boeing and Airbus, which house significant portions of their supply chains in the U.S., could be shielded from some of the pain of reshoring. But even Ortberg admitted the process won’t be entirely pain-free.

“This isn’t good for either company to be in this situation, or the industry,” he said. “I can’t tell you the timing of when this is going to all get resolved, but I can tell you we’re going to take proactive action and manage our way through it.”