⚠ Tariffs Land on Collins FirstModerate threat

RTX (RTX) — threat to the moat

Collins pays tariffs on parts it sells under long original-equipment contracts, and RTX does not say how much they cost.

Collins makes components across many countries and ships them to airframers in the United States and Europe, which makes it RTX's segment most exposed to tariffs. The 2025 filing says higher volume lifted Collins's profit, "partially offset by the impact of tariffs"1. On the second-quarter 2026 call the chief financial officer said Collins was managing "some tariff headwind that we're still going to see this year"2.

Collins operating margin by quarter (%)17.2%Q1 202615.9%Q2 2026RTX Q2 2026 earnings release; Q1 derived as first half less Q2
A dip in the quarter the CFO named tariffs.

RTX does not disclose the amount, which is itself the risk: it cannot be tracked from the outside except through the margin.

The difficulty is who pays. Original-equipment contracts with Boeing and Airbus run for years at agreed prices, so a new tariff on a component often cannot be passed on until the contract is renegotiated. Aftermarket prices move faster.

RTX's own quarterly forward-looking statements list trade policy among the factors that could change its results3, and its 2025 annual report names tariffs as an offset to Pratt & Whitney's profit as well as Collins's4. The exposure is companywide; Collins is simply where it lands most visibly, because its products cross the most borders on the way to an aircraft.

Collins's margin still rose to 16.3% in 20255. The reading to take is its quarterly margin, 15.9% in the second quarter of 202667; two quarters below 15% with tariffs named as the cause would say they are no longer being absorbed.

References
  1. ReportedThe 2025 filing says higher volume lifted Collins's profit, "partially offset by the impact of tariffs".
    RTX Form 10-K for fiscal 2025 - Item 7 segment review and Note 20: net sales and operating profit by segment for 2023-2025, organic sales drivers (commercial aftermarket, OEM, military), sales by customer type, products and services, segment assets, capital expenditure and research and development - Collins Aerospace: segment sales, operating profit, organic drivers, customer types, assets and capital expenditure. — FY2023-FY2025 · publ. 6 February 2026 · source ↗
  2. ReportedOn the second-quarter 2026 call the chief financial officer said Collins was managing "some tariff headwind that we're still going to see this year".
    RTX second-quarter 2026 earnings call transcript (The Motley Fool) - Raytheon bookings and book-to-bill, GTF aircraft-on-ground and MRO output, munitions output, framework agreements, the defence budget request, GTF Advantage, Collins margin plans and segment outlook - commercial: GTF fleet, maintenance output, aftermarket, orders, Collins and the outlook. — Q2 2026 · publ. 24 July 2026 · source ↗
  3. ReportedRTX's own quarterly forward-looking statements list trade policy among the factors that could change its results, and its 2025 annual report names tariffs as an offset to Pratt & Whitney's profit as well as Collins's.
    RTX second-quarter 2026 earnings release, Form 8-K exhibit 99 - sales of $24.7 billion, segment results, cash flow, balance sheet and raised 2026 outlook. — Q2 2026 · publ. 23 July 2026 · source ↗
  4. ReportedRTX's own quarterly forward-looking statements list trade policy among the factors that could change its results, and its 2025 annual report names tariffs as an offset to Pratt & Whitney's profit as well as Collins's.
    RTX Form 10-K for fiscal 2025 - Item 7 segment review and Note 20: net sales and operating profit by segment for 2023-2025, organic sales drivers (commercial aftermarket, OEM, military), sales by customer type, products and services, segment assets, capital expenditure and research and development - Pratt & Whitney: segment sales, operating profit, organic drivers, customer types, assets and capital expenditure. — FY2023-FY2025 · publ. 6 February 2026 · source ↗
  5. ReportedCollins's margin still rose to 16.3% in 2025.
    RTX Form 10-K for fiscal 2025 - Item 7 segment review and Note 20: net sales and operating profit by segment for 2023-2025, organic sales drivers (commercial aftermarket, OEM, military), sales by customer type, products and services, segment assets, capital expenditure and research and development - Collins Aerospace: segment sales, operating profit, organic drivers, customer types, assets and capital expenditure. — FY2023-FY2025 · publ. 6 February 2026 · source ↗
  6. ReportedThe reading to take is its quarterly margin, 15.9% in the second quarter of 2026; two quarters below 15% with tariffs named as the cause would say they are no longer being absorbed.
    RTX second-quarter 2026 earnings release, Form 8-K exhibit 99 - sales of $24.7 billion, segment results, cash flow, balance sheet and raised 2026 outlook. — Q2 2026 · publ. 23 July 2026 · source ↗
  7. Moat Explorer calcThe reading to take is its quarterly margin, 15.9% in the second quarter of 2026; two quarters below 15% with tariffs named as the cause would say they are no longer being absorbed.
    Moat Explorer calculation from RTX's segment results (Forms 10-K FY2023 and FY2025, Q2 2026 earnings release; $ millions). Operating margins: Collins 2,380 / 21,152 = 11.3% (2021), 2,816 / 23,052 = 12.2% (2022), 4,923 / 30,196 = 16.3% (2025), H1 2026 2,613 / 15,812 = 16.5%, Q2 2026 1,306 / 8,210 = 15.9%, Q1 2026 (first half less Q2) 1,307 / 7,602 = 17.2%; Pratt & Whitney 454 / 18,150 = 2.5% (2021), 1,075 / 20,530 = 5.2% (2022), 2,015 / 28,066 = 7.2% (2024), 2,596 / 32,916 = 7.9% (2025), H1 2026 1,448 / 17,062 = 8.5%, Q2 2026 738 / 8,889 = 8.3%; Raytheon 3,399 / 26,611 = 12.8% (2021), 2,448 / 25,176 = 9.7% (2022), 2,379 / 26,350 = 9.0% (2023), 3,227 / 28,043 = 11.5% (2025), Q2 2026 1,042 / 8,269 = 12.6%; Q1 2026 Raytheon sales 15,214 - 8,269 = 6,945. Growth 2021-2025: Collins 30,196 / 21,152 - 1 = 43% (about 9% a year), operating profit 4,923 / 2,380 = 2.07 times; Pratt & Whitney 32,916 / 18,150 - 1 = 81%, 2025 32,916 / 28,066 - 1 = 17%; Raytheon 28,043 / 26,611 - 1 = 5%. 2025 shares of segment sales (91,155): Pratt & Whitney 36%, Collins 33%, Raytheon 31%; of segment operating profit (10,746): Collins 4,923 = 45.8%, Raytheon 3,227 = 30.0%, Pratt & Whitney 2,596 = 24.2%. Operating profit over segment assets 2025: Collins 4,923 / 71,680 = 6.9%, Raytheon 3,227 / 44,795 = 7.2%, Pratt & Whitney 2,596 / 52,482 = 4.9%. Pratt & Whitney services share 14,449 / 32,916 = 44%; services growth 14,449 / 9,717 = 1.49 times. Collins commercial share 18,858 / 27,585 = 68%; Collins government sales 7,061 + 436 + 1,230 = 8,727, 8,727 / 27,585 = 32%. Raytheon U.S. government share 19,237 / 27,892 = 69%. Collins services share 6,118 / 27,585 = 22%. Pratt & Whitney segment assets 52,482 / 44,307 - 1 = 18%. Pratt & Whitney 2025 defence bookings other than F135: about 9.0 - 2.9 - 2.4 = 3.7 billion. GE Aerospace Commercial Engines & Services profit 8,861 against Pratt & Whitney 2,596: 3.4 times; margins 26.6% against 7.9%. — 2021-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in RTX's Forms 10-K and 10-Q, earnings releases, earnings call and market data; operands shown in the source line.
Sources
Generated September 28, 2026