Will Trump’s Trade Tariffs Affect Air Travel?
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.
The price of a ticket on your favorite airline could be going up as a result of President Trump’s announced plan to impose tariffs on steel and aluminum — metals that play a huge part in airplane manufacturing.
But probably not.
“I don’t see the traveler seeing any impact whatsoever,” said aviation analyst Scott Hamilton of Leeham Group in Seattle. “You’re still going to have fare wars,” Hamilton said in a phone interview. Wall Street analysts seem to agree.
“The impact should be small,” wrote analyst Seth Seifman at JP Morgan Chase, as he assessed the probable impact of the tariffs, which so far have only been announced, on Boeing’s profitability.
In theory, it should be a big deal: 70 percent of Boeing’s workhorse 737 is made from aluminum. Airbus’ similarly-sized A320 is roughly the same. But even so, a 10 percent increase in aluminum prices would work out to less than a 2 percent increase in the price of an aircraft, Seifman wrote. And a less-than-2-percent increase would be barely noticeable to travelers, Hamilton said.
But even that wouldn’t be felt right away, given the long lead times in the industry. Boeing and Airbus sold a whopping 1,799 planes between them in 2017, but those planes won’t be delivered until well into the 2020s, Hamilton noted. “You’re selling airplanes today for delivery seven years from now,” he said. So, if the price increase affects fares, “by the time it gets down to the traveler, nobody’s going to notice,” he said.
So while a slight increase in metal prices now could affect airfares in 2025, it’s more likely that other real-time factors — fuel costs, labor costs, competition on individual routes — will play a bigger role in determining pricing at that point.
Hamilton noted that Boeing itself raised baseline prices for its planes by 4 percent for 2018, which is more than the increase resulting from the tariffs projected by Seifman.
And all this is assuming that President Trump sticks to his tariffs announcement. The New York Times reported Friday that some leaders within the administration and Congress are urging the President to walk back the plan, and sources told the paper that so far, there isn’t a written proposal in place to carry them out.
But assuming the tariffs are implemented, the cost to Boeing is likely to be small, Seifman wrote. “Lots of cost variables move around all the time, and so a low-single-digit change does not seem like a showstopper,” he wrote.
Welcome to The Points Guy!
Earn 90,000 bonus miles and 10,000 Medallion® Qualification Miles (MQMs) after you spend $3,000 in purchases on your new card in the first three months of card membership. Offer ends 11/10/2021.
With Status Boost™, earn 10,000 Medallion Qualification Miles (MQMs) after you spend $25,000 in purchases on your Card in a calendar year, up to two times per year getting you closer to Medallion Status. Earn 3X Miles on Delta purchases and purchases made directly with hotels, 2X Miles at restaurants and at U.S. supermarkets and earn 1X Mile on all other eligible purchases. Terms Apply.
- Limited Time Offer: Earn 90,000 Bonus Miles and 10,000 Medallion® Qualification Miles (MQMs) after you spend $3,000 in purchases on your new Card in your first 3 months. Offer expires 11/10/2021.
- Earn up to 20,000 Medallion® Qualification Miles (MQMs) with Status Boost® per year. After you spend $25,000 in purchases on your Card in a calendar year, you can earn 10,000 MQMs two times per year, getting you closer to Medallion® Status. MQMs are used to determine Medallion® Status and are different than miles you earn toward flights.
- Earn 3X Miles on Delta purchases and purchases made directly with hotels.
- Earn 2X Miles at restaurants worldwide, including takeout and delivery and at U.S. supermarkets.
- Earn 1X Miles on all other eligible purchases.
- Receive a Domestic Main Cabin round-trip companion certificate each year upon renewal of your Card. *Payment of the government imposed taxes and fees of no more than $75 for roundtrip domestic flights (for itineraries with up to four flight segments) is required. Baggage charges and other restrictions apply. See terms and conditions for details.
- Enjoy your first checked bag free on Delta flights.
- Fee Credit for Global Entry or TSA Pre✓®.
- Enjoy an exclusive rate of $39 per person per visit to enter the Delta Sky Club® for you and up to two guests when traveling on a Delta flight.
- No Foreign Transaction Fees.
- $250 Annual Fee.
- Terms Apply.
- See Rates & Fees