Needham The Impact of Trump's New Drone and Component Import Tariff

August 14, 2026 INDUSTRY UPDATE

Industrial Technology Drones & Defense Tech Topic of Discussion Impact on new drone tariffs The Impact of Trump's New Drone and Component Import Tariff

After the market closed on August 13th, President Trump signed a Proclamation imposing CONTRIBUTING ANALYSTS significant new tariffs on imported drones and drone components, representing what we AUSTIN BOHLIG view as another major step in the Administration's push to rapidly build the U.S. drone ( industrial base. Our biggest takeaway is it is clear that expanding domestic drone production has become a national priority and that both drones and their critical components will need to be manufactured in the U.S. While the FCC's prior actions in December 2025 restricted new foreign-made drones and critical components from entering the U.S. market, we believe this announcement is significantly broader because it directly targets the economics of MENTIONED COMPANIES importing drones and components across the existing market. Given the freshness of today's AMPX: $11.94, PT: $20.00 announcement, there are still a number of important questions to be answered, however, AVAV: $193.81, PT: $225.00 we believe one conclusion is already clear that the biggest winner is the U.S. drone industrial AVEX: $20.89, PT: $45.00 base. Specifically, we believe the largest beneficiaries are the domestic component suppliers, notably UMAC, LTRX and potentially AMPX. We believe many U.S. drone OEMs continue DPRO: $4.62, PT: $8.00 to source key components internationally, and we believe the new tariff structure should LTRX: $6.17, PT: $11.00 significantly accelerate the shift toward domestically manufactured alternatives. ONDS: $8.91, PT: $19.00 RCAT: $10.23, PT: $15.00 ■ What Was Announced? The Trump Administration imposed a new tiered tariff UMAC: $27.24, PT: $40.00 structure on imported drones and drone components, including a 100% tariff on drones deemed particularly sensitive to national security, which included drones above 25kg (55 pounds) and drones with thermal-imaging capabilities, as well as their docking stations and certain critical components. Smaller drones without certain national- security-sensitive capabilities and other drone components will generally face a 25% tariff, while qualifying imports from certain allied countries will receive lower rates, including 15% for the EU, Japan, Liechtenstein, South Korea, Switzerland and Taiwan, and 10% for the UK, provided substantially all hardware, software and technology originates within those countries or the U.S. The proclamation also authorizes the Department of Commerce to establish an onshoring program for companies making new investments in U.S. drone and component manufacturing. Most tariffs take effect 21 days after signing, while tariffs on less-sensitive components and certain DoW-approved products receive a 180-day implementation period. Notably, these were issued under Section 232 of the Trade Expansion Act of 1962, which likely implies a firmer outcome compared to other tariffs that are currently being rolled back.

■ What's The Initial Impact Across Our Unmanned Universe? While there remains a number of unanswered questions around implementation and exactly which components will be subject to each tariff rate, we believe the directional takeaway is this is mostly positive for the U.S. drone industrial base. From an OEM perspective, we believe systems sales across our coverage, including RCAT, AVAV, ONDS, AVEX, should be largely unaffected given U.S. based production. Draganfly (DPRO), although based in Canada, has U.S. based manufacturing, so we believe the initial impact is limited. The bigger near-term question is how much of each OEM's BOM continues to be sourced internationally, which could create some COGS pressure depending on the components impacted and applicable tariff rates. Furthermore, we wonder if countries issue retaliatory tariffs on drones, which could have an impact on OEMs international business. That said, we believe these tariffs largely favor the U.S. based drone component manufacturers, notably Unusual Machines (UMAC) and Lantronix (LTRX) within our coverage universe. While OEMs…