Drone stocks rally after Trump orders tariffs on foreign-made components

Drone stocks rallied on Friday after President Donald Trump announced import tariffs in an effort to boost U.S. manufacturing and protect national security.

Unusual Machines popped 15%, while Red Cat rallied about 7%. Aerovironment and Kratos also climbed.

"U.S. drone production needs to be expanded rapidly to ensure U.S. national and economic security," the White House wrote in a release, adding that outsourcing parts poses major security and cybersecurity concerns.

The White House said the tariffs will create new jobs, while protecting U.S. national security and the defense industrial base.

The directive subjects large drones with "sensitive" military capabilities like thermal imaging to a 100% tariff and smaller drones lacking capabilities to a 25% levy. Trump slapped 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.

Unusual Machines, which makes drones and drone components, added the president's son , Donald Trump Jr ., to its advisory board in November 2024. Trump Jr. held 331,580 shares in the company as of Nov. 27, 2024.

The U.S. is seeking to scale drone production on U.S. soil and reduce its reliance on outsourcing parts, especially from China, which has long dominated the drone market.

The efforts come as part of Trump's broader plans to reindustrialize the U.S. military and scale defense capabilities.

Earlier this year, the Trump administration launched the more than $1 billion drone dominance program aimed at scaling U.S. manufacturing of small, low-cost drones. The second stage of that project is slated to begin this month.

Geopolitical risks abroad and the war in Iran have highlighted the need for lower-cost weapons to combat. For 2027, the Trump administration is asking for a record $1.5 trillion defense budget . As part of that budget, the Department of Defense is looking for a historic $75 billion for drones.

The tariffs will go into effect within 21 days. For drones and parts that are not "particularly sensitive," the duties will happen in 180 days. The order also allows the Department of Commerce to launch an onshoring program to help companies looking to invest in drones in the U.S.

WATCH: Matt Higgins: Drone manufacturing is now a national security priority

Got a confidential news tip? We want to hear from you.

Get this delivered to your inbox, and more info about our products and services.

Data is a real-time snapshot *Data is delayed at least 15 minutes. Global Business and Financial News, Stock Quotes, and Market Data and Analysis.

Indexed and credited by AIPROPX. Originating outlet: CNBC. Open at source →