On April 2, 2025, the US raised tariffs on all Chinese imports to an effective 54 percent rate, combining a new 34 percent levy with existing duties, to pressure Beijing on technology transfers and supply chain security.
China retaliated on April 4 with a matching 34 percent tariff on U.S. goods (effective April 10) and imposed export controls on rare earth elements vital for advanced weapon systems. President Trump then threatened an additional 50 percent tariff if China did not roll back its measures by April 8, intensifying uncertainty for defense supply chains.
These reciprocal tariffs and export curbs are reshaping cost structures, procurement strategies, and R&D priorities across the defense sector.
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1. Palantir Technologies (NYSE: PLTR)
Palantir’s AI centric, software only model insulates it from hardware tariffs, positioning the company to capture reallocated defense budgets.
Tariff Dynamics:
With U.S. duties on Chinese electronics, servers, and machine tools at 54 percent, federal agencies face sharply higher hardware costs. This is accelerating investment in software analytics platforms
Growth Metrics:
Palantir delivered a 215.99 percent one year total return and boasts 5 year revenue and earnings growth of 285.9 percent and 179.74 percent, respectively.
Market Sentiment:
Trading at USD 78.05 versus an average target of USD 73.83, Palantir holds a “Slightly Bullish” outlook from Stock Target Advisor (7 positive vs. 5 negative signals) despite a “Hold” consensus from analysts.
2. Lockheed Martin (NYSE: LMT)
Lockheed Martin’s reliance on precision components now subject to high tariffs has prompted strategic supply chain realignment and greater emphasis on allied contracts.
Tariff Dynamics:
U.S. tariffs of 54 percent on Chinese machine tools, rare earth magnets, and electronics elevate production costs for missile and aircraft systems. Lockheed is expanding domestic manufacturing and securing tariff neutral suppliers in NATO countries to stabilize margins.
Allied Demand:
European NATO members have committed to an average 7 percent defense budget increase in 2025, opening new procurement opportunities for Lockheed’s F 35 jets and Patriot systems.
Growth Metrics:
Lockheed posted a 10.78 percent one year total return and 5 year revenue and earnings growth of 25.69 percent and 37.14 percent, respectively.
Market Sentiment:
With a current price of USD 468.88 and a target of USD 555.56, Lockheed enjoys a “Buy” consensus and a “Slightly Bullish” Stock Target Advisor rating (3 positive vs. 2 negative signals).
3. RTX Corporation (NYSE: RTX)
RTX’s diversified segments mitigate single market risks, but high tariffs on composites and avionics chips drive strategic sourcing changes.
Tariff Dynamics:
The 54 percent U.S. tariff on Chinese made avionics chips, carbon fiber composites, and precision bearings increases input costs. RTX is accelerating on shoring at Pratt & Whitney and Collins Aerospace and diversifying suppliers in Canada and Europe.
Growth Metrics:
RTX achieved a 45.23 percent one year total return and maintains positive free cash flow, though its 5 year revenue growth is a modest 4.79 percent.
Market Sentiment:
Trading at USD 128.11 with a USD 142.86 target, RTX is rated “Strong Buy” by analysts but “Neutral” by Stock Target Advisor (6 positive vs. 7 negative signals).
4. Boeing (NYSE: BA)
Boeing’s global supply chain is highly exposed to steep tariffs on Chinese sourced aerospace parts, but the company is investing heavily in U.S. production facilities.
Tariff Dynamics:
U.S. tariffs at 54 percent on Chinese titanium forgings, avionics, and specialized bearings sharply inflate costs. Boeing is expanding manufacturing in South Carolina and Missouri to reduce reliance on imported parts, but near term margin compression is inevitable.
Growth Metrics:
Boeing faces a 16.38 percent one year total return, negative recent free cash flow, and a debt/equity ratio of 719.84 percent.
Market Sentiment:
At USD 154.06 versus a USD 197.63 target, Boeing carries a “Bearish” Stock Target Advisor rating (8 negative vs. 2 positive signals) despite a “Strong Buy” consensus from 19 analysts.
Conclusion:
The reciprocal US and China tariffs, 54 percent duties on Chinese imports, matching 34 percent retaliatory tariffs on U.S. goods, and China’s rare earth export controls, are dramatically altering the defense sector’s economics.
Software focused firms like Palantir stand to gain as budgets shift away from hardware, while hardware centric contractors (Lockheed, RTX, Boeing) must adapt via on shoring, allied procurement, and supplier diversification.
Muzzammil is a content writer at Stock Target Advisor. He has been writing stock news and analysis at Stock Target Advisor since 2023 and has worked in the financial domain in various roles since 2020. He has previously worked on an equity research firm that analyzed companies listed on the stock markets in the U.S. and Canada and performed fundamental and qualitative analyses of management strength, business strategy, and product/services forecast as indicated by major brokers covering the stock.
