President Donald Trump ordered import tariffs on drones and their components to boost U.S. manufacturing and protect national security. Shares of Unusual Machines, Red Cat, Aerovironment and Kratos climbed on the news, which sets duties ranging from 10% to 100% depending on a drone's origin and capabilities.
Drone makers jump on tariff order
Drone stocks in the stock market rallied on Friday after Trump announced import tariffs on drones in an effort to boost U.S. manufacturing and protect national security. Unusual Machines popped 21%, while Red Cat rallied about 5%. Aerovironment and Kratos also climbed.
According to the White House: "U.S. drone production needs to be expanded rapidly to ensure U.S. national and economic security", adding that outsourcing parts poses major security and cybersecurity concerns. The White House said the tariffs will create new jobs while protecting national security and the defense industrial base.
Tariff rates vary by drone type and origin
The directive subjects large drones with "sensitive" military capabilities like thermal imaging to a 100% tariff and smaller drones lacking such capabilities to a 25% levy. Trump also set a 15% tariff on drones and parts from the European Union, Japan, Liechtenstein, the Republic of Korea, Switzerland and Taiwan, and 10% on those from the U.K.
These tariffs will take effect within 21 days, while duties on drones and parts that are not "particularly sensitive" will phase in over 180 days. The order also lets the Department of Commerce launch an onshoring program to help companies invest in U.S. drone manufacturing.
Push to cut reliance on China
The U.S. is seeking to scale drone production on domestic soil and reduce its reliance on outsourced parts, especially from China, which has long dominated the drone market. The effort is part of Trump's broader push to reindustrialize the U.S. military and expand defense capabilities.
For 2027, the administration is asking for a record $1.5 trillion defense budget, and the Department of Defense is seeking a historic $75 billion for drones as part of that budget. Earlier this year, the administration launched a drone dominance program worth more than $1 billion aimed at scaling U.S. manufacturing of small, low-cost drones, with its second stage set to begin this month.
Unusual Machines, which makes drones and drone components, added Donald Trump Jr. to its advisory board in November 2024. Trump Jr. held 331,580 shares in the company as of Nov. 27, 2024.
Source: CNBC
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