The President has threatened a new tariff on products of the EU. This has the potential to dramatically increase the cost of Airbus parts, and other aerospace products from the EU.
This would also impact other products of the EU, like products from Thales and Safran, etc. It could also affect non-EU company products that are produced in the EU, like EU-produced articles from UK companies BAE Systems and Rolls Royce.
The current tariff standards apply a 10% duty to products of the EU (up from duty-free treatment before the current trade wars started). This means that the importer is responsible for paying 10% of the value of the parts to the U.S. government as a tariff. This is typically in addition to any other tariffs that may apply to the transaction.
U.S. tariffs on products of the European Union are scheduled to increase to a 20% duty rate on July 9, 2025.
Yesterday, the administration threatened to increase US tariffs on products of the EU to 50%. The threatened date for this is June 1. If the administration carries-through on this threat, then it could reflect a dramatic increase in the cost of aircraft parts from the EU.
Obviously, this affects U.S. aircraft parts distributors who have to pay the increased duty rates on aircraft parts that they import. But distributors aren’t the only ones affected!
- This could affect U.S. repair stations who have to pay higher prices for aircraft parts that are products of Europe or other (tariffed) foreign locations. This could make it difficult for them to remain competitive against non-U.S. repair stations who do not have to pay those same duties on aircraft parts.
- This could impact air carriers who will pay higher prices for maintenance. It could also make it difficult for U.S. air carriers to remain competitive against non-U.S. competitors, because the non-U.S. competitors may not have to pay those tariffs for parts acquired and installed outside the United States.
- This could have a downstream effect on the affordability of air travel for Americans.
There is a potential for some relief. I partnered with one of ASA’s members to file a request for a customs ruling to prevent the tariffs on the EU from being applied to aircraft and aircraft parts from the EU (e.g. Airbus aircraft and their parts). We are looking forward to the ruling on that petition.