TAMPA, Fla. — Faced with rising costs and supply chain disruptions, the space industry is scrambling to mitigate the financial strain of the Trump administration’s “America First” trade and tariff policies.
Space business leaders said during a Feb. 25 Space Tech Expo webinar that recently imposed tariffs — and the threat of additional import taxes — will drive up near-term costs for satellite systems and launch vehicles. Among the concerns are higher duties on imported raw materials and electronic components critical for space hardware.
“The overall direction of the next four years is: it’s going to be more costly to play in the space ecosystem,” said David Meyouhas, vice president of product management at space electronics supplier Frontgrade.
However, he noted the industry also has experience adapting to large-scale upheaval.
COVID-19 provided “a very good training ground for supply chain disruptions,” he said, adding that space companies learned to adapt to shifting trade dynamics during the pandemic.
While tariffs will create near-term pain, he and other panelists said those fees should also drive innovation as firms are forced to rethink supply chains and develop new solutions to maintain reliability amid growing restrictions.
Mitigation strategies
Nicole Robinson, president of U.S. secure communications provider DataPath, noted that incentivizing the space industry to rely on domestic suppliers has long been a bipartisan effort.
She suggested space-related companies should “really double down in this moment” and “expand your U.S.-made content, explore the avenues to invest in U.S. manufacturers.”
Robinson emphasized supporting U.S. startups and smaller firms, which may not have the financial flexibility to absorb higher costs like larger, more established companies.
“These tariffs now, and this increased burden on having the cash to outlay up front, will be most felt by the small businesses, by the startups,” she said, “and I think we should all be concerned about that and what that means for innovation over the next few years.”
Feodora Kurtz, head of corporate strategy for European aerospace giant Airbus’ U.S.-based space and defense subsidiary, said the shifting trade environment underscores the need to Americanize supply chains and work with partners, including startups, to integrate key capabilities.
“In order to work as a trusted supplier to the U.S. government, you have to have FOCI (foreign ownership, control or influence) mitigation,” Kurtz said. “You have to have assets in the U.S., which are in a way cost prohibitive from an investment standpoint.”
She pointed to Airbus Ventures, the company’s early-stage investment arm in California, as a model for supporting U.S. startups while meeting national security requirements.
Step back and someone else steps in
Former United Nations Office for Outer Space Affairs director Simonetta Di Pippo, now a professor of space economy at Italy’s SDA Bocconi, cautioned that adjusting to trade policies takes time — and in the interim, other nations stand ready to capitalize.
“The other countries will jump on the area left,” she said, pointing to China’s rapid expansion in space technology and international partnerships.
China, in particular, has been aggressively securing new trade and collaboration opportunities, she noted, and its growing influence could reshape the global space industry. The country’s ability to mobilize resources quickly and establish partnerships gives it an advantage over nations grappling with shifting policies.
Meyouhas said these dynamics are also playing out with U.S. allies such as Canada, which is reassessing trade alliances in response to proposed tariffs.
“Canada is going to take a hard look at what is key and critical for them to have as a capability that is not necessarily reliant on the U.S. or other countries,” he said. “or maybe they end up partnering with other countries that they don’t feel as threatened by.”
Deal accelerators
While tariffs pose obstacles, former Aerojet Rocketdyne executive Frank Slazer noted that the Trump administration is also seeking to create a more business-friendly environment, including plans for a broad review of regulations in the coming months.
A “huge number of them are expected to be either relaxed or eliminated,” he said, “and as a result, we may see a lot more opportunities to trade internationally in ways that we hadn’t previously in the space sector.”
He said the review could include more relaxed export control rules under the International Traffic in Arms Regulations (ITAR), which have historically constrained U.S. collaboration with even non-adversarial space nations like India.
“And India is probably — outside of China, the United States — the next biggest growing space power that’s out there,” Slazer said.
Still, he noted the potential for reciprocal trade tariffs complicates the international dealmaking landscape.
Lessons from the past
Meyouhas also warned that history has shown how trade restrictions can leave lasting consequences for the U.S. space industry.
“The industry and countries as a whole have a very long memory,” he said, adding that when “the U.S. instituted the ITAR regulation, circa 2000s, it burned a lot of our international customers because they had items that were instantiated, qualified, designed into their systems” only to find them suddenly restricted.
“And I think the lesson that they learned is, no matter the policy that’s in place today or tomorrow, that doesn’t necessarily guarantee that that policy will be in place five years from now,” he continued, “or that we won’t have 180-degree turn.”
Amid trade volatility, he said “proceed with caution” will likely be the mindset international customers adopt when considering collaboration with the U.S. in the future.
