US president-elect Donald Trump’s surprise victory in the 8 November election has uncertain implications for the aerospace industry on a variety of fronts, with few articulated policy positions initially to provide guidance for corporate planners.
If Hillary Clinton's candidacy represented a continuation of Barack Obama's eight-year term with minor tweaks, a Trump administration promises a sharp break with orthodoxy, even with familiar tenets of Republican policy on trade.
In the short term, Trump's outspoken opposition to the Obama administration's nuclear weapons deal with Iran spells trouble for an already-complicated sale of potentially hundreds of Airbus and Boeing aircraft to Iran Air, which was premised on the terms of an agreement that Trump has repeatedly promised to nullify.
Trump also has promised to dismantle the US Export-Import Bank, a controversial export credit agency that until 2015 dispensed 30-40% of the value of its loans annually to support sales of Boeing aircraft to foreign customers. As some Republicans in Congress have blocked nominations to the board of directors, Ex-Im Bank has been unable to approve any loan greater than $10 million for more than a year. That leadership vacuum is unlikely to change under a Trump administration, if the bank is allowed to survive at all.
In the longer term, Trump's protectionist proposals on trade raise new questions about the aerospace industry's globalised supply chain. Although Boeing has pulled back already from the excesses of the 787's outsourced design and manufacturing, Trump has remained critical on the campaign trail. In particular, Trump has criticised Boeing's decision to establish a completion and delivery centre in Zhoushan, China, in co-operation with Comac. Trump has also promised to renegotiate the terms of the North American Free Trade Agreement, which over the last decade has promoted a thriving aerospace manufacturing cluster in Mexico.
On defence, Trump has proposed ramping up modernisation spending, as national priorities would shift away from Obama's "pivot" to Asia and towards countering what Trump calls "radical Islam". He has promised to lift the budget sequestration caps imposed in 2011 that threaten to slash defence spending by more than $100 billion from fiscal 2018 to 2020. Trump also said he would ask Congress to offset those gains with unspecified savings elsewhere in the budget. His campaign platform promises to increase spending on cyber technology and the intelligence agencies.
In some cases, Trump's bark on the campaign trail may prove worse than his bite on policy matters. Much, for example, has been made of Trump's call for "maintaining" a fleet of 1,200 US Air Force fighters, which appears to conflict with an actual inventory of more than 1,800 fighters today. It is likely, however, that Trump was referencing a 2015 assessment of the US military by the Heritage Foundation, a conservative think-tank. That assessment found that the USAF maintained a combat-ready fleet of only 1,113 fighters at any one time. Heritage analysts argued that the USAF needs 87 more fighters to maintain a proper reserve in case 1,000 fighters are tied up in two simultaneous regional conflicts.
In campaign speeches, Trump also has singled out the Pentagon's most expensive weapons programme – the Lockheed Martin F-35 – for mild criticism: "I do hear it's not very good," Trump said on a radio show on 22 October 2015. But that represents all of Trump's commentary about the programme, and it seems more an offhand remark than a true policy position. Trump's official platform contains no reference to the F-35 – or any other weapons acquisition programme, for that matter.
Source: Cirium Dashboard
