Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.
President Trump imposed new 20% tariffs on US imports from the EU with the stated intention of boosting domestic manufacturing. Though Airbus jets sold to US customers generated nearly one quarter of its 2024 revenue, most of them were assembled in Alabama, powered by US-made engines.
Big picture: It is not clear at this time if the tariffs will last a few days, months, or the rest of President Trump’s term. While Airbus AIR and its primary competitor Boeing BA have been caught in the trade conflict crossfire before, we are not modeling any shift in demand for Airbus products at this time.
The trade deal sponsored by the first Trump administration in late 2020 before the World Trade Organization may set a precedent for excluding or reducing tariffs on these companies, especially considering they share multiple suppliers and export to one another’s markets.It also remains very unclear how much of the tariffs might be absorbed or offset by the meaningful portion of US content, including engines, components, and interiors, in most of the aircraft Airbus sells in the US, where its customers have nearly 1,500 planes on order or option.
The bottom line: We haven’t altered our forecast or fair value estimate for wide-moat Airbus as a result of the new tariffs and will monitor what reciprocal agreements or retaliation materialize in the trans-Atlantic trade relationship. We see the shares of wide-moat Airbus as fairly valued.
By midday on April 3, Airbus shares traded down around 1% adjusted for fluctuation in the euro to US dollar exchange rate, far less than the nearly 5% selloff in industrials stocks overall.
The author or authors do not own shares in any securities mentioned in this article.
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