As global manufacturing realigns in response to geopolitical shifts, CEOs in aerospace and defense (A&D) must prepare for a new operating environment. Execution risk will remain a factor, but trade exposure and regulatory velocity will give new importance to digital resilience within companies and across the supply base.
The latest signals from trade talks, supplier actions, and procurement reforms all point to one conclusion: the conditions under which A&D manufacturers operate are tightening. Leaders who respond early will protect program margins and readiness. Those who delay may find core assumptions about cost, timing, and eligibility no longer hold.
New Tariff Pressures Are Already in Motion
Tensions between the U.S. and EU are putting aerospace components back on the tariff radar. During the Paris Air Show, U.S. lawmakers linked tariff policy directly to national security and competitiveness. The industry didn’t waste time responding. Executives warned of cascading impacts, including delays, cost inflation, and risks to certification timelines.
Some suppliers are already taking defensive positions. Howmet Aerospace’s recent force majeure declaration over tariff-related challenges is just one example. Moves like this highlight how trade policy now directly affects supply chain stability and program execution. CEOs should weigh tariff exposure with the same rigor as other operational risks—and go a step further by mapping indirect exposure more deeply in the tiered supply base, where disruptions often surface first but often go unreported until it’s too late.
Regulatory Layers Are Now Operational Variables
Tariffs are making headlines, but they are not the only policy pressure manufacturers face. Climate policy, export enforcement, and sourcing transparency have moved from ESG talking points to enforceable criteria in defense and commercial aviation, particularly in the EU. Carbon border adjustments, which are already being phased in, are altering the unit economics of global sourcing.
At the same time, the U.S. Department of Commerce Bureau of Industry and Security (BIS) and the EU’s Dual-Use Regulation have tightened oversight on a wide range of parts and assemblies, turning international partnerships into licensing exercises. The U.S. BIS has even added export controls on AI model weights.
Restrictions like these have the potential to reshape how A&D programs are staffed, sourced, and certified. Regulatory risks are rising to the level of financial and technical variables in planning and modeling. CEOs need to give them the digital tools and operational flexibility to manage this mix.
European Defense Spending Will Raise the Bar
European defense budgets are expected to double by year-end, topping $170 billion. But this wave of spending won’t follow the old model. Programs come with requirements for secure-by-design architecture, regional sustainability standards, and the development of a localized supply base.
U.S. and global suppliers hoping to compete in this space must be able to operate under EU policy constraints—including emissions verification, digital sovereignty, and export traceability. Low bids will not necessarily have the advantage unless they comply with other complex criteria.
Compliance Maturity is Now Business Critical
The gaps between global partners are becoming more expensive. Many aerospace programs still rely on a fragmented mesh of localized systems, spreadsheets, and one-off integrations. These point solutions slow down audits, increase the cost of change, and create risk when suppliers shift or parts cross borders.
The challenge is no longer theoretical. For example, NATO-aligned programs now carry specific digital traceability mandates. Sustainability certifications are increasingly tied to structured data. Even minor supplier transitions can fail if core systems can’t validate quality records or emissions history. What used to be an efficiency drag is now a compliance failure point.
Building Execution Systems for Resilience
Program success now depends on a different set of capabilities, such as real-time traceability, accurate emissions reporting embedded in the production process, and automated compliance checkpoints. Soon, manual processes that have remained in place due to fear of change will become serious business liabilities.
At iBase-t, we’ve worked with A&D manufacturers through every major shift over the last two decades. Today, we see leaders using Solumina to operationalize compliance—tracking part-level emissions, linking supplier quality to certification status, and flagging export constraints during planning, not after the fact.
The industry is entering a new phase—less defined by scale and more by adaptability. By enabling a digital thread that links data to execution throughout the entire journey, purpose-built solutions can enable competitive agility in the face of ever-changing laws, policies, and regulatory environments. This is the time to assess your readiness, not from a compliance checklist, but from the standpoint of delivery risk, strategic flexibility, and long-term competitiveness.
