Stock Decline of General Electric Today
General Electric (GE) is grappling with significant cost and supply chain disruptions due to the ongoing COVID-19 restrictions in China and the Russia-Ukraine conflict. These issues, rooted in trade tensions and commodity shortages, are causing operational complexities and tariff challenges that affect GE's production and delivery timelines.
The COVID-19 restrictions in China have created a complex global trade environment, with tariffs and market access disputes between China and major economies. This instability in the region is impacting GE's operations. The ongoing Russia-Ukraine conflict, on the other hand, has caused severe disruptions in the supply of critical commodities essential for manufacturing, such as neon, krypton, and xenon gases, used in semiconductor production.
GE anticipates a roughly $500 million impact by 2025 due to tariff challenges linked to trade tensions, reflecting increased costs and operational hurdles. To mitigate these risks, the company is investing over $1 billion across U.S. factories and supply chain infrastructure to increase internal and external capacity by 40% by the decade's end. This includes improving supplier reliability, with supplier delivery volume recently exceeding 95% of commitments, nearly double from early 2024 levels.
Despite these efforts, GE's aerospace division, which is the company's most significant profit and cash flow generator, is facing cost and supply chain pressures that require careful management to maintain profitability and operational stability amid external geopolitical and trade challenges. While GE's aerospace division showed strong revenue growth—total engine deliveries rose by 45% in Q2 2025—these pressures are a concern.
The stock market's worry about economic growth prospects often extends to the transportation sector, which includes aviation. Shares in General Electric (GE) decreased by more than 6% by midday today, reflecting the broader day of negative sentiment over the economy and the aerospace sector. The supply chain dislocations in Shanghai and the war in Ukraine have magnified GE's cost and supply chain issues.
Neither the lockdowns in China nor the war in Ukraine is expected to end quickly, which could prolong GE's challenges. However, the global economy can potentially get back into recovery mode once the circumstances in China and the war in Ukraine are resolved.
In conclusion, GE faces cost pressures and supply chain disruptions from COVID-19 restrictions in China (reflected in trade disputes and tariffs) and from the Ukraine war’s impact on critical supply commodities and geopolitical uncertainty. The company is actively investing to mitigate these risks but acknowledges a significant financial impact from tariffs and supply chain complexities.
- General Electric (GE) is investing over $1 billion across U.S. factories and supply chain infrastructure to address operational complexities and tariff challenges, aiming to increase internal and external capacity by 40% by the decade's end.
- Despite the efforts to mitigate risks, GE's aerospace division, vital for the company's profit and cash flow, is facing cost and supply chain pressures that require careful management to maintain profitability.
- The financial impact from tariffs and supply chain complexities caused by the COVID-19 restrictions in China and the Ukraine war is significant, with GE anticipating a roughly $500 million impact by 2025.
