Satcom Vulnerable to Trade War Ripple Effects

The space business is inherently global and always subject to geopolitics through such things as export control regulations, said Maxime Puteaux of consultancy Novaspace. Moreover, a nation could prioritize domestic suppliers over international ones, he said. It would also be conceivable for the U.S. to include landing rights for satellite operators like SpaceX in trade package negotiations with other countries.

Large satellite constellations, and telecommunications services broadly, are economic areas of interest as well as economic tools, and trade volatility and negotiations will affect them, said Ian Christensen, senior director-private sector programs for Secure World Foundation. He said nations might not focus on denying or approving market access as an economic tool, as market access is a lengthy process, but tariffs can be turned on and off rapidly. Sanctions also can be activated and halted quickly, he said, pointing to China's temporarily hitting Viasat last year over defense-related sales to Taiwan.

In retaliation last week for U.S. tariffs on Canada, Ontario Premier Doug Ford said he was "ripping up" the province's $100 million deal with SpaceX's Starlink, which was to bring connectivity to unserved and underserved locations in the northern part of the Canadian province. When the tariffs were put on hold, Ford said Ontario "will also pause our retaliatory measures."

Satellite providers "are no more or less at risk than any other international businesses" in trade disputes, emailed Scott Harris of Crest Hill Advisors. What governments or companies can do with existing contracts "is a contract-by-contract question governed by the applicable contract law," he said. Since the U.S. opened its markets to foreign satellite operators in the 1990s it has been "very open and accessible to foreign operators on very transparent terms in a very transparent process." Meanwhile, other governments "have been able to play non-transparent games with market access to protect incumbents or national champions. Some governments have been doing that for 30 years, and it is still going on," Harris said.

Increased disputes over trade could make planning and launching satellite systems more difficult, a lawyer with satellite and trade expertise told us. Low earth orbit systems are already expensive, and trade frictions could increase costs, the lawyer said. Even prior to his ascendancy in the Trump administration, Elon Musk's SpaceX played a significant role in U.S. telecom policymaking, and a nation moving to exclude U.S. satellite providers, particularly SpaceX, could very well see an FCC response, such as restricting that country's U.S. market access or just delaying its pending applications, the lawyer added.

Roughly two in three of Starlink's customers are outside the U.S., and its fastest consumer adoption is in international markets, Quilty Space's Caleb Henry wrote. "But in a world where the operator is punished for the actions of its increasingly controversial founder, international growth is becoming more difficult," Henry said. Telesat's forthcoming Lightspeed low earth orbit constellation "is destined to become Canada’s home team sovereign LEO constellation when it starts service in 2027." With 10% of Starlink's customer base in Canada, "retaliatory tariffs have much to bite," he said. OneWeb also could benefit from a trade war that targets SpaceX. Henry said Amazon's Kuiper system could find a niche among prospective international customers who view Musk as difficult. In addition, Kuiper could be punished for Trump tariffs and face retaliatory protectionist measures in other countries. Henry said Trump's threatened EU tariffs could drive Europe to further support Eutelsat's OneWeb as "a western LEO system with less political baggage than its U.S. counterparts."

The resumption of Canadian tariffs, set for March 1, seems more likely than not, given the lame-duck government in Ottawa and the lack of a head of Commerce or U.S. Trade Representative in the U.S., Steptoe trade policy lawyer Jeff Weiss said during a webinar last week. Steptoe international trade lobbyist Meghan Pearce said U.S. industries knew tariffs would happen under Trump, but they nonetheless were frustrated with their across-the-board nature, which created complex supply chain issues. Pearce said that while Congress has authority over trade policy under the Constitution, it has delegated much of that to the president over time, and it's unlikely that Hill Republicans will challenge Trump.

"This ain't your granddaddy's Republican Party," said Steptoe government contracts lawyer Matthew Flynn, who had roles in the first Trump administration and was a policy adviser for the Trump-Vance transition team. He said Trump is willing to threaten and actually use military and economic tools to get deals he wants.