Hexcel Corp’s (HXL) global manufacturing footprint exposes the company to ongoing geopolitical risks and shifting trade policies. In recent filings, management noted that the initial impact of tariffs and volatile energy costs in Europe contributed to margin pressure during the first half of 2025. Specifically, inventory reduction actions taken to offset these costs led to unfavorable overhead absorption.
The company is monitoring potential 2026 trade policy shifts that could affect raw material costs for carbon fiber precursors. However, Hexcel’s strong position in defense programs — which saw broad-based growth in fighters and space applications — provides a hedge against commercial trade volatility. Defense and Space sales for the first nine months of 2025 rose 8.2%, driven by programs such as the F-35 and CH-53K.