President Trump signed a proclamation under Section 232 of the Trade Expansion Act imposing steep tariffs on imported drone systems, citing national security concerns. Heavy and military-grade drones weighing over 25 kilograms or equipped with thermal imaging will face a 100% ad valorem tariff, while smaller commercial drones and key components will be subject to a 25% duty. The measures take effect on September 3, 2026, and the order directly targets foreign-made unmanned aircraft systems and critical drone components.
US-based drone manufacturers moved sharply higher in pre-market trading on August 14, 2026. Red Cat Holdings gained 7.1% to trade around $11.03, while AeroVironment rose 3.3% to $195.69. The policy includes an onshoring incentive allowing the Commerce Department to grant temporary tariff exemptions to companies that commit to building new US manufacturing facilities before January 2029. Broader market reaction was muted, with the S&P 500 up just 0.1% and the Nasdaq gaining 0.2%, confirming the move was sector-specific.
Red Cat reported Q2 revenue of $20.19 million, a 527% year-over-year increase but below the $22.78 million consensus estimate, and an adjusted loss of $0.26 per share. Management reaffirmed full-year revenue guidance of $150 million to $180 million. Separately, Red Cat director Christopher Moe sold 30,000 shares worth $310,600 across two transactions. AeroVironment reported Q1 revenue of $641.62 million, up 133.3% year over year, with EPS of $1.84 beating the $1.47 estimate. Analysts remain broadly supportive of both companies, though governance risk remains after Bernstein Liebhard announced an investigation into potential fiduciary-duty breaches by AVAV directors and officers.
