At press time on April 2, Boeing stock (NYSE: BA) was trading at $167.01, after a 6.58% drop on the 1-week chart. President Trump’s latest round of tariffs, to be announced later today, could severely impact the aviation giant’s long and complex supply chain.
This latest move has brought BA shares back in the red, as year-to-date (YTD) losses stand at 2.09%.
Wall Street maintains a bullish long-term outlook, despite regulatory uncertainty and delays in crucial component production.
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In the long run, the Boeing shares will likely recover. There’s a simple reason. The aerospace company operates as part of a duopoly.
Beyond Boeing, only one other venture produces large, commercial aircraft. That business is European aviation giant Airbus.
In contrast with Boeing stock, Airbus stock (OTCKMKTS: EADSY) hasn’t seen a similar pullback. On a YTD basis, EADSY shares, which currently trade at $45.28, are up 13.65%.
So, is that gap about to close? Is Airbus the next aerospace company about to plummet to the ground in terms of stock price?
Why an Airbus share price crash remains unlikely
Two reasons exist as to why EADSY stock will likely weather present volatility and new tariff measures.
Firstly, Airbus stock maintains a degree of immunity to tariffs, seeing as how it maintains a production facility in Mobile, Alabama. Although up-to-date figures are not readily available, at the start of the decade, the facility accounted for double-digit percentage production of each of the company’s flagship aircraft categories. Moreover, the business has expanded its production capacity as of late.
Secondly, Airbus shares could soar due to tailwinds from European rearmament. The European Union’s defense spending has increased by 122% over the past decade. As Euroatlantic relations continue collapsing, the old continent bloc is aiming to earmark around €800 billion ($863.04 billion) for defense over the next four years.
With the aforementioned duopoly in mind, Airbus, already a major military contractor in its own right, suddenly stands to absorb an influx of revenue that will, at worst, go a long way in alleviating trade war losses.
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