Larry Culp Pushes Trump to Maintain Rules Dating Back to the 70s

As incoming tariffs stir chaos in the industry, General Electric CEO Larry Culp is advocating for President Donald Trump to uphold the rules of the 1979 Civil Aircraft Agreement. This eliminated import duties on all civil aircraft and related parts, components, and flight simulators through participating countries.

For the last 50-ish years, the aviation industry has been able to skirt import fees on international suppliers under the Civil Aircraft Agreement. This has proved beneficial for all parties, including both domestic and overseas manufacturers as well as governments.

The regulation has been left untouched because of this, with no one daring to threaten such an interconnected and fragile system. However, potential new tariffs under the Trump Administration have yet to give aviation an exemption.

GE Aerospace is one of many manufacturers that have felt the chaotic repercussions of these policies. Though GE has yet to face real delays, one of its major suppliers, Howmet Aerospace, has mentioned halting deliveries if the situation gets too rough. This would put a big damper on GE’s Leap 1A engine since Howmet is in charge of developing a new high-pressure turbine blade for the design. 

Boeing, which also uses Howmet Aerospace as a supplier, may be facing similar challenges as it battles already low production rates. The company is working to navigate a supply chain stressed by both policy uncertainty and ongoing parts shortages.

If current tariffs hold true, GE Aerospace could be paying up to $500 million more for deliveries than previous rates. The manufacturer has already begun looking into mitigation tactics, including foreign trade zones, duty drawbacks, cost controls, and tariff surcharges, to keep the fees from plummeting its profits.

FMI: www.geaerospace.com