RTX lowered its 2025 profit forecast on Tuesday, citing higher costs and instability tied to U.S. trade policy even as demand for jet engines and aftermarket services stays strong. The aerospace and defense company said tariffs on aluminum and steel are pushing up input prices and adding new stress to an already strained supply base.
The move highlights the collision between policy and production. RTX, a key supplier to commercial and military programs, warned earlier that trade measures could weigh on earnings by as much as $850 million if current tariff levels hold. Investors are watching how much of those costs can be offset by price adjustments and efficiency gains through late 2025.
What changed in the outlook
Company executives tied the reduced forecast to higher metal costs and ripple effects on suppliers. Aluminum and steel feed into engines, structures, and repair parts across RTX’s portfolio.
“Trump’s imposition of tariffs on imports of aluminum and steel has shrouded the markets with uncertainty, threatening to add pressure on an already-strained supply chain.”
While RTX continues to see healthy demand for engines and service work, management signaled that cost inflation and delivery risks are outpacing earlier planning. The updated view suggests pricing power in aftermarket services will not fully blunt the shock from raw materials and related levies.
The tariff math: assumptions driving risk
RTX previously quantified its potential exposure using a set of tariff assumptions. The company warned that the hit could rise if those rates persist or climb.
- Steel and aluminum tariffs: 25%
- Tariffs on China: 145%
- Global reciprocal tariffs: 10%
“RTX had warned of an $850 million hit from the trade war,” based on those tariff levels.
The estimates reflect both direct material costs and pass-through effects along the supplier network. For aerospace, where metal content and precision fabrication are significant, even small percentage moves can echo through multi-year contracts.
Supply chain strain meets strong demand
The aerospace sector is still working through shortages that began during the pandemic. Labor, specialty alloys, and forged parts remain tight. Tariffs amplify those pressures by raising input costs and complicating sourcing decisions.
RTX’s engine and service units have benefited from high flight activity and long backlogs. But higher metal prices and possible bottlenecks may narrow margins on new deliveries and extend turnaround times in maintenance shops. Airlines often accept price escalators on parts, yet there are limits to how much can be passed on quickly without hurting customer relationships.
Industry impact and investor questions
The cut to guidance puts fresh focus on how aerospace manufacturers manage policy-driven costs. Key questions include whether companies can renegotiate supplier terms, redesign parts to use less tariff-affected material, or shift sourcing to countries with lower duties.
Analysts say the path forward may vary by program. Long-term defense contracts often include inflation protections, while commercial deals can be more exposed to spot movements in materials. The timing of any tariff changes will also matter. A swift policy adjustment could relieve pressure in late 2025, but a prolonged regime would keep costs elevated.
What to watch next
Investors will track several markers over the next two quarters:
- Updates to tariff policy on metals and China-origin goods
- Supplier delivery rates for forgings and castings
- Margin trends in aftermarket services versus original equipment
- Any pricing actions or cost-saving measures announced by RTX
For now, RTX is balancing strong customer demand with a tougher cost picture. The company’s warning that markets are uncertain serves as a reminder that policy choices can reshape industrial economics far from the negotiating table.
The latest forecast cut suggests near-term earnings will be restrained by tariff-related headwinds even as sales stay firm. If input costs ease or sourcing adapts, margins could recover. Until then, the company’s $850 million risk estimate offers a practical yardstick: watch the metal tariffs, and the rest of the numbers will follow.
