Stakeholders Highlight Unintended Effects of Incoming Import Fees

Although pretty much delayed for the moment, President Donald Trump announced new executive orders that would place a 25% tariff on imports from Canada and Mexico as well as a 10% tariff on Chinese goods. These charges could generate a wide range of side effects for the American aviation industry.

The tariffs were a major part of Trump’s presidential campaign and are eventually planned to be imposed on all imports. Negotiations between Trump, Canadian Prime Minister Justin Trudeau, and Mexican President Claudia Sheinbaum on February 3 put a temporary pause on the 25% tariff in exchange for heightened commitment to border security. The 10% tariff on China’s imports was left out of these discussions.

The executive orders are most directly tied to air cargo operations. With a higher charge to import goods, demand will likely see a major decrease. This happened back in Trump’s first term; tariffs were placed on China and Europe, causing a steep decline in air freight volumes for the first seven months of 2019 compared to the same period a year prior.

With aerospace manufacturers relying on a heavily interconnected global supply chain, the tariffs will also complicate planemaking. Major American companies that source parts internationally may have to rethink their list of suppliers and begin the lengthy process of gaining regulatory approval. This becomes especially challenging when other nations introduce counter-tariffs.

“Even in instances where alternative suppliers may exist, or could be created domestically, aviation manufacturers cannot rapidly shift to different sources or facilities without FAA regulatory approval, potentially compromising contracts, safety and compliance, quality and value to the consumer,” the General Aviation Manufacturers Association (GAMA) explained.

The US’s maintenance, repair, and overhaul (MRO) sector would be indirectly affected by the tariffs. Jeopardizing the availability of products used in domestic MRO work damages repair stations and the nearly 210,000 highly trained employees that operate them.

“It is vital to recognize that U.S. aviation manufacturing is in a global leadership position,” GAMA continued. “This position can be improved by government policies and action focused on strengthening aviation safety agreements, policies and investments to bolster innovation, as well as measures to address specific aviation supply chain challenges.”

FMI: www.gama.aero