Facing the Heat: Trump's Tariffs and the Increasing Costs of the F-35 Production
Potential Disadvantage: Potential Impact of Donald Trump's Policies on the F-35's Competition with the Rafale
It seems like Donald Trump's tariffs are causing some unexpected heat for Lockheed Martin, the company behind the F-35 Lightning II. The production costs of this American-made stealth fighter jet are expected to surge due to the tariffs affecting more than 1,900 suppliers across a dozen nations.
The rising tariffs, according to the Wall Street Journal and Le Point, have supply chains stretching across countries like the United Kingdom, Denmark, Australia, Germany, Canada, Norway, the Netherlands, and Italy. For instance, the wings are produced by Italian company Leonardo, and the ejection seat is designed by British firm Martin-Baker.
The tariffs were initially advantageous for the F-35 production model, thanks to the lack of prohibitive tariffs between Western countries during the jet's first decade of existence. However, the era of low-tariff trade might soon be a thing of the past. RTX Group, which manufactures the F-35's engines through its American subsidiary Pratt & Whitney, is estimated to lose $850 million due to these tariffs.
Lockheed Martin is working on a strategy to mitigate the consequences of this tariff increase. The company assures that the cost increase will mainly be borne by the countries purchasing the planes. For the moment, Lockheed maintains that it has a sufficient stock of components to weather any cost increase. Some members of Congress are advocating for defense-related tariff exemptions.
The F-35, known for its impressive technical qualities, has been sold in approximately 1,130 units since its launch in 2015, compared to the Rafale's 507 units worldwide.
Under the Scanner
- Defense Industries
- Trade Policies
- International Procurement
Behind the Scenes
- Inflationary pressures: Economists warn that escalatory tariffs (particularly China's 125% reciprocal levy on U.S. imports and suspended rare earth element exports) risk amplifying inflationary pressures, impacting the F-35's $2.1 trillion lifetime program cost.
- Fixed-price contract concerns: Mid-production components, such as avionics and sensors, face abrupt cost spikes due to tariffs on critical materials like electronics and alloys. Suppliers cannot renegotiate fixed-price contracts, forcing them to absorb these increased costs.
- Lockheed’s resilience: Despite tariff pressures, Lockheed maintains guidance of 170–190 F-35 deliveries in 2025, bolstered by a 360-jet backlog and profit margins providing short-term absorption capacity.
- International supplier strain: Allies face higher procurement costs and potential disruptions in critical material supplies (like rare earth elements and magnets) from China, affecting components like actuators and guidance systems.
- Long-term uncertainty: Sustained trade tensions could inflate sustainment costs, which account for ~70% of the F-35's lifecycle expenses, and potentially erode the multinational support structure for the F-35 program.
- The significant rise in tariffs under President Trump's administration has placed Lockheed Martin, the company behind the F-35 Lightning II, under scrutiny, as it may increase the costs of producing the F-35 stealth fighter jet.
- The tariffs have affected over 1,900 suppliers worldwide, including prominent manufacturers such as Leonardo in Italy and Martin-Baker in the United Kingdom.
- The tariffs were initially advantageous for the F-35 production model; however, the era of low-tariff trade may soon be a thing of the past.
- The tariffs could potentially cause inflationary pressures, especially with China's 125% reciprocal levy on U.S. imports, impacting the F-35's $2.1 trillion lifetime program cost.
- Certain mid-production components like avionics and sensors, which are subject to tariffs on critical materials like electronics and alloys, face abrupt cost spikes.
- Despite the tariff pressures, Lockheed Martin is deemed resilient with a guidance of 170-190 F-35 deliveries in 2025 and a strong 360-jet backlog, though international supplier strain and long-term uncertainty from sustained trade tensions remain concerns in the aerospace industry.
