Tariffs continue to be a moving target. Today’s Federal Register includes some new tariff changes that affect aircraft parts imports (some of these new provisions are not yet listed in revision 17 to the HTSUS).
A quick look at some major jurisdictions that produce civil aircraft parts shows the variety of approaches currently being used to assign tariff value to aircraft parts being imported into the United States:
Source (“product of”)
Duty and Tariff Code
Aircraft parts that are products of Brazil (e.g. many Embraer parts):
Base duty plus 10% additional duty (9903.02.09)(but NOT the additional 40% (9903.01.82)) for aircraft parts)
Aircraft parts that are the products of Canada(e.g. many Bombardier parts):
If subject to USMCA – no additional duty (9903.01.14) If NOT subject to USMCA – base duty plus 35% (9903.01.10)
Aircraft parts that are products of the EU** (e.g. many Airbus parts):
The higher of 15% (9903.02.20) or the normally-applicable base duty value if it exceeds 15% (9903.02.19)
Aircraft parts that are products of Japan(e.g. JAMCO parts):
Base duty plus 15% (9903.02.30)
Aircraft parts that are products of the UK(e.g. many BAE Systems parts):
No additional duty for aircraft parts (9903.96.01)
This table assumes an aircraft part that is subject to heading 8807 (where the base duty is 0%). In all cases, the civil aircraft-specific provisions are often limited to certain tariff codes, so please confirm the treatment of your actual import based on its tariff classification and actual country of origin. There may be additional codes and duties (or exceptions) that apply to your transaction based on the specific facts of your import.
These rates and applications are constantly changing, so be sure to verify information for the date of your entry into the U.S. Customs Zone!
** SPECIAL NOTE: The EU has reported that the United States has agreed to accept civil aviation products of the EU (including aircraft parts) with no additional duty; however this is not yet reflected in any Executive Order, Federal Register Notice, nor HTSUS provision. Stay tuned – we hope that this exception will be implemented into U.S. trade law, soon!
This evening we have guidance for you about tariffs:
An update on the latest tariffs
Guidance on using the USMCA to avoid certain tariffs on goods originating in Canada and Mexico
Guidance for non-US exporters who want to mitigate the impact of U.S. tariffs
Update on New Tariffs
I am getting a lot of questions about the latest round of tariffs and how they will affect aircraft parts that are the products of non-US countries and are imported into the United States. As of this evening, the United States has not yet filed the new tariff documents with the Federal Register. In some cases these filings can differ in significant ways from the descriptions found in the executive orders, so it is important to wait to read these documents before we can give any compliance advice. It is unfortunate that the short time-frame for implementation (between Executive Order and implementation date) lately has meant that the tariffs may not be published until after they become effective.
An example of the sort of things that are contained in the tariff details includes the USMCA provision that we talk about in the next section.
We will watch for the advance copies and get you information on the latest round of tariffs as soon as possible.
Products of Mexico and/or Canada
Products of Mexico and Canada are currently subject to 25% duties under the applicable Chapter 99 tariffs. We wrote about this in a previous blog post. One potential way to mitigate this is to import goods under the USMCA provisions. The USMCA applies to “goods originating in the territory of a USMCA country.” This includes goods that are 100% a product of the U.S. Canada or Mexico, but it also includes some goods that are mostly made of material from these jurisdictions. It also includes certain goods that are made from non-USMCA materials (‘non-originating goods’) according to rules that vary based on the tariff subheading of the imported good. The details of this exception are provided in General Note 11 to the HTSUS; this general note is 136 pages long, so I won’t attempt summarize it all, here, but I will note that aircraft parts imported under heading 8807 may be made from non-originating goods of any other (different) subheading and still have the potential to be classified as USMCA goods as long as they are “transformed” in a USMCA country. One reason for this is the process that makes them an aircraft part under heading 8807 is typically considered transformative.
You typically need to enter USMCA goods under the USMCA provisions of 9903.01.04 [Mexico] or 9903.01.14 [Canada] to avoid the 25% tariffs.
Special USMCA Note: Many aircraft parts are classified under other tariff headings, but the “aircraft parts” heading is 8807. Effective January 27, 2022, the primary tariff heading for aircraft parts changed from 8803 to 8807. The USMCA was originally signed in 2018 and became effective in 2020. This was before the change of tariff headings, so USMCA references 8803, instead of 8807. To find the 8807 reference in US law (as it applies to the USMCA) you need to start with 19 C.F.R. 102.11(a), which provides the rules for determining the country of origin of imported goods. That regulation incorporates 19 C.F.R. 102.20, which provides the up-to-date tariff rules including the rules for 8807 aircraft parts. You can confirm that this rule is intended to be used to interpret the USMCA by looking at the scope clause found in 19 C.F.R. 102.0.
One of the USMCA requirements in a certification of origin. You ought to consider working with the producer in Canada or Mexico – they may have a USMCA certificate of origin template already available but if they don’t then check out the ASA Webinar from last week for more details on what needs to be in that certificate. You can also find the nine elements of a certificate of origin listed in Annex 5-A to Chapter 5 of the USMCA. If the U.S. import from Canada or Mexico is 100% a product of Canada or Mexico then the certificate may be simple, but if a portion of the constituent components comes from outside of the U.S., Canada or Mexico then there are rules for whether it can be certified. The rules are too voluminous to repeat here but (as stated above) General Note 11 provides some useful guidance.
One final note: if you are sending goods to Canada or Mexico for repair, then the repair is considered an “advancement in value,” and the cost (or fair market value) of that advancement is subject to duty. This applies to U.S. goods. Examples:
If you send a US good to Canada and it is repaired there, then this is an “advancement in value” transaction whose value is subject to the 25% tariff on products of Canada. Dutiable value is typically going to be the invoiced amount for the repair. See Tariff Subheadings 9802.00.50 and 9903.01.10.
If you send a US good to Canada and it is repaired there on a warranty repair, then this is an “advancement in value” transaction. The value will be subject to the 25% tariff on products of Canada. Because there is typically no charge for a warranty repair, the value will be calculated based on the fair market value of the work performed. See Tariff Subheadings 9802.00.40 and 9903.01.10.
Guide for Non-US Exporters
For non-U.S. exporters watching the tariff news out of the United States, it can be frustrating to watch and think about how this could affect your own business. In effect, a tariff is like a tax on your goods that your customer in the U.S. must pay to the government. It effectively increases the cost to your customer (making your goods potentially less attractive) without putting any money into your pocket.
Working together, we can help to make sure that your importing customers don’t pay any more in impot duties than they need to. Here are some useful rules to remember:
Rule Number One: Tariffs apply to non-US goods and non-US “added value.” If you are selling Boeing parts that were made in the U.S. (and were not advanced in value outside the U.S.) to a U.S. customer, then the importer probably does not need to pay duty on those goods.
Rule Number Two: Communicate with your U.S. customer. Make sure that you are cooperating to make the right certifications and/or representations to minimize the effect of U.S. tariffs.
Rule Number Three: Try to identify strategies for minimizing duties associated with the tariffs. The USMCA strategy described above is just one way to use the tariff rules to reduce the potential duties that the importer needs to pay.
Rule Number Four: Be careful of the way that you classify your goods. There are special tariff codes for different situations. The USMCA provisions of 9903.01.04 [Mexico] and 9903.01.14 [Canada] are just two examples of tariff classifications that can help save your customer money. Also, make sure that you are accurately classifying goods (see our blog article on the subject). Misclassified goods run the risk of being held up in Customs.
The aviation industry is a global community. We will get through these tariffs, together.
The President has issued two new executive orders providing some relief from tariffs on products of Canada and Mexico.
The essence of the two executive orders is that Canadian and/or Mexican goods that are subject to general note 11 to the Harmonized Tariff Schedule of the United States (HTSUS) may be entered under the duty-free provisions of that note. The note implements the trade agreement between the United States, Mexico, and Canada. This represents an alternative path to the one traditionally taken by aircraft parts importers, who often rely on the traditional zero-duty provisions that apply to many aircraft parts.
The good news is that many aircraft parts from these two jurisdictions are likely to be covered under this general note 11, so they can continue to enter duty-free until the expiration of this executive order. There is no stated expiration in either executive order; however the President has announced in social media that this forbearance shall only last until April 2, 2025.
The bad news is that there may be different documentation and analysis required to properly claim the duty-free treatment, so it may require importers to perform some additional due diligence and paperwork to support the claim of duty-free treatment.
In each case, the tariffs apply to products of Canada and Mexico, so aircraft parts that are products of these countries will be affected; and the dutiable value of maintenance that is performed in these two countries may also be affected.
As always, the implementation in the Federal Register could vary from the language of the executive order, so pay careful attention to the actual Federal Register publication implementing these executive orders.
New tariffs are active and anyone engaged in importing goods needs to be aware of the new tariffs and how they may affect your business. This can be difficult because if you pull up the HTSUS today, it is not yet updated with these tariffs. We’ve summarized the upcoming tariffs imposing duties on goods from Canada, China (including Hong Kong) and Mexico.
The new tariffs went into effect on March 4 (today) at 12:01 am. They amount to a 25% tariff on products from Mexico or Canada, and a 20% tariff on products of China. The 20% tariff on Chinese products is a 10% increase from the tariff imposed a month ago, and is imposed in addition to the pre-existing 25% tariff on certain products (including most aircraft parts) that was imposed during the first Trump Administration (e.g. the additional China tariffs applied to most aircraft parts will be 45%).
Tariff
Products
Duty
9903.01.24
Articles that are the product of China and/or Hong Kong
20%
9903.01.01
Articles that are the product of Mexico
25%
9903.01.10
Articles that are the products of Canada
25%
There are some exceptions, but their applicability to the aviation industry will be tenuous. For Canada and Mexico, the exceptions include:
donations of articles intended to be used to relieve human suffering, such as food, clothing, and medicine
informational materials (like service bulletins)
The additional duties imposed by these tariffs generally will not apply if you are importing goods under a provision of chapter 98 of the HTSUS, except that some of the provisions most likely to be used by our community ARE subject to duty under the new tariffs. In particular goods entered under subheadings 9802.00.40, 9802.00.50, 9802.00.60, and 9802.00.80 are subject to the new tariffs.
The first three subheadings apply to goods sent abroad for repair or processing and then returned to the United States. The importer will need to pay a duty on the value of the repairs. For subheadings 9802.00.40, 9802.00.50, and 9802.00.60, the additional duties apply to the value of repairs, alterations, or processing performed in Canada, China (including Hong Kong), and Mexico. Note that subheading 9802.00.40 is for warranty repairs – the rules specify that the advancement in value will be subject to tariff even though the warranty repairs might be performed for free. Subheading 9802.00.60 is for processing of metal goods that are made in the U.S., exported for processing (e.g. a coating or plating or any other process), and then returned to the U.S. for further processing (the return is the import subject to a duty). In each case, the value of the repair or processing will be subject to the additional tariffs imposed on Canada, China and Mexico.
9802.00.80 is used when someone produces parts in the United States and then they are assembled abroad before being returned to the U.S. The dutiable value of the returned article is based on the value of the assembly minus the value of the individual parts from the U.S. This dutiable value will still be subject to the additional tariffs imposed on Canada, China and Mexico.
If you are importing aircraft parts from China, then check to see whether the additional 25% duty on certain products of China applies – it is under tariff code 9903.88.01.
You can click below to find the DRAFT Federal Register notices. These tariffs are expected to be published in the Federal Register on Thursday the 6th, but copies are currently available for public inspection:
We’ve been answering a number of questions from our members about tariff status. This article is meant to summarize what we know about recent tariff activity, but the administration hasn’t maintained a uniform message about tariffs, so what we know could change at any time.
The United States has applied a 10% tariff in addition to any pre-existing tariffs that already applied to aircraft parts from China.
It is important to recognize that there is an existing list of products of China that were already subject to a 25% ‘additional duty’ provision. This is described under subheading 9903.88.01 and the description can be found under U.S. note 20(b) to sub-chapter III of chapter 99 of the US Harmonized Tariff System. Many aircraft parts are subject to a 25% duty under this provision, including those under (for example) headings 8409, 8411, and 8807. This means that the additional 10% duty of tariff 9903.01.20 brings the import duty on those aircraft parts to 35% (assuming they would have been otherwise subject to a zero-duty entry, but-for the ‘additional duty’ provisions, e.g. aircraft parts under headings 8409, 8411, or 8807).
Because of the peculiar way that the China tariffs had been drafted, it is possible that articles subject to a non-zero base duty may have that base duty doubled (see this article for a detailed explanation). This is a non-issue for most aircraft parts because most are subject to a zero percent base duty rate, but some aircraft parts (like certain fasteners) have a non-zero base duty and the peculiarities will need to be resolved for those imports.
Canada and Mexico
The United States is scheduled to impose 25% tariffs against substantially all products of Canada and substantially all products of Mexico. In each case the tariffs are currently schedule to apply to Canadian imports and Mexican imports as of 12:01 am March 4, 2025. The tariffs (which are the description of how the duty rates will be applied) were withdrawn when the Canada and Mexico tariffs were delayed, so the republished tariffs could change.
Typically, the 25% tariff would be applied to the import value of the goods (25% of the value is charged as a duty). When the goods are exported from the United States for the purpose of obtaining repair abroad, and then subsequently returned to the U.S., the dutiable value upon return is typically calculated based on the parts-and-labor-cost of the MRO work that was accomplished abroad (unless it is a no-charge repair, like a warranty repair, in which case it is based on the fair market value of the repair). This is covered under chapter 98 tariff subheadings like 9802.00.40 (for warranty repairs) or 9802.00.50 (for non-warranty repairs). The goods would be subject to a basic duty based on the repair value times the rate that applies to the underlying good. For example, if the repair cost was $20,000 and the underlying aircraft part was subject to heading 8807, then the old rate of duty would be zero percent so the duty would be zero dollars. Under the new tariffs with the 25% duty rates, though, if the repair cost was $20,000 and the tariff on products of the country in which the repair was performed is at a 25% duty rate, then the U.S. importer to whom the repaired part is returned (from Canada) would need to pay an import duty of $5,000 (in addition to the repair cost).
Steel and Aluminum
The Administration has also issued orders to apply and increase duty rates on steel and aluminum (including plates, sheets, strips, bars, rods, tubes and wires). The new duty rates for aluminum from most countries will be 25% (in addition to any other applicable tariffs). Derivative products made from aluminum or steel will also be subject to a 10% duty (in addition to any other applicable tariffs). The executive order that announced these is quite complicated, with different phase-in dates for different countries, and some higher duty rates for certain countries (for example Turkey will face a 50% duty rate on all steel articles imports and Russia will face a 200% duty rate on imported derivative aluminum articles).
If you think that the steel or aluminum tariffs may apply to your imports then please be sure to read the tariffs thoroughly (don’t just rely on this blog article because there are too many details to republish them all here).
Other Targets
In tomorrow’s Federal Register, we expect to see a new request from the U.S. Trade Representative (USTR). The new request will ask the American people to identify any unfair trade practices by other countries, with a discussion of the harm to the United States. The draft publication refers to these as non-reciprocal trade arrangements so it appears that the Administration (which has threatened to implement reciprocal tariffs) may be looking at such arrangements as justifications for tariffs on comparable products from these source countries. This investigation is a response to the “America First Trade Policy” Executive Order.
A lot of articles are being written about the President’s tariff threats. It continues to be a wild ride. As I am writing this, it has been reported that Mexico and Canada have agreed to increase border security, and the President has agreed to a 30-day suspension of the tariffs on Mexico and Canada. There does not yet seem to be a deal to delay the China tariff. You can see copies of the executive orders linked in the “Resources” section, below.
The actual tariffs are important – they are the written expositions of what is subject to duty and how much duty will apply. They answer the questions of whether the tariffs will apply to your specific transaction. Unlike the Executive Orders, which leave open questions, the tariffs are typically more precise and often address questions that are likely to arise.
As discussed in our earlier article, there are many aircraft and engine articles manufactured in other countries that could be imported into the U.S. and thus could be subject to the new ‘additional duty’ provisions.
The tariffs are scheduled to be published on February 5, 2025 in the Federal Register. As they are drafted, the ‘additional duty’ provisions set out in the tariffs will be effective with respect to articles of Canada and the People’s Republic of China, if those articles are entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern standard time on February 4, 2025 (e.g. any time starting on Tuesday the 4th). This generally includes aircraft parts imported as products of these jursidictions. So this means that the tariffs that are scheduled to be published will be (would be?) effective in a matter of a few hours from now.
Based on the reported White House announcements (about the 30-day suspensions), it seems likely that the U.S. government will file a subsequent amendment suspending application of the new tariffs for thirty days (consistent with today’s Executive Order).
Either way, there is a distinct possibility that sooner or later, we will need to know the specifics of the tariffs as they apply to the aviation community.
Table of New Tariffs (Summary)
Tariff #
What is Subject to the Tariff?
Duty for most articles
9903.01.10
“All products of Canada,” except for certain donations, certain informational products, certain oil, gas, minerals and energy products, baggage, and things that were in transit when the tariff was published.
25%
9903.01.20
“All products of China,” except for certain donations, certain informational products, certain oil, gas, minerals and energy products, baggage, and things that were in transit when the tariff was published.
10% [in addition to already existing tariffsfor a selection of goods]
Special Notes
SCOPE:
In plain English, most aircraft parts will fall within the scope clauses of the Canadian and Chinese tariffs as they have been drafted. As discussed below, this will also include repairs performed in Canada or China.
CHINA:
It is important to recognize that there is an existing list of products of China that are already subject to a 25% ‘additional duty’ provision. This is described under subheading 9903.88.01 and the description can be found under U.S. note 20(b) to subchapter III of chapter 99 of the US Harmonized Tariff System. Many aircraft parts are subject to a 25% duty under this provision, including those under (for example) headings 8409, 8411, and 8807. This means that the additional 10% duty of tariff 9903.01.20 brings the import duty on those aircraft parts to 35% (assuming they would have been otherwise subject to a zero-duty entry, but-for the ‘additional duty’ provisions, e.g. aircraft parts under headings 8409, 8411, or 8807).
MEXICO:
You might note that I have not mentioned the new tariff for products from Mexico. That is because the new tariff for products from Mexico has not yet been made a part of the Federal Register’s records. It is possible that a tariff for products from Mexico will be published a day later, on February 6, 2025. It is possible that the Mexico tariff is more complicated and thus is simply not yet ready to be published. IT is also possible that the Mexican ‘deal’ was struck early enough that the Tariff publication could be delayed, while the Canadian ‘deal’ may have come too late to forestall submission of the tariff to the federal Register.
REPAIRS:
The Chinese and Canadian ‘additional duty’ provisions specifically state that they apply to the value of repairs.
What about articles sent to Canada for repair? Typically, U.S. articles repaired abroad and then returned to the United States (or articles for which a duty was previously paid that are subsequently sent to Canada for repair) are charged a duty based on the added value associated with the repair. This added value is typically equal to the cost of the repair (unless it is a no-charge repair, in which case it is based on the fair market value fo the repair). This is covered under chapter 98 tariff subheadings like 9802.00.40 (for warranty repairs) or 9802.00.50 (for non-warranty repairs). The goods would be subject to a basic duty based on the repair value times the rate that applies to the underlying good. For example, if the repair cost was $20,000 and the underlying aircraft part was subject to heading 8807, then the rate of duty would be zero percent so the duty would be zero dollars. Under the new tariffs, though, if the repair cost was $20,000 and the tariff is at a 25% rate, then the U.S. importer to whom the repaired part is returned (from Canada) would need to pay an import duty of $5,000. This requirement appears to be suspended with the remainder of the Canadian tariff, but if the Canadian tariffs go into effect in March, then the application to repairs will still apply.
Obviously, anything sent to China for repair will be subject to the applicable tariffs as applied to the value of the repair; the tariffs for imports of goods and repairs from China have not been suspended.
The United States has issued new tariffs on products from Canada, China, and Mexico. These new tariffs go into effect for all products from those countries. This includes aircraft, aircraft engines, and aircraft parts. The announced tariffs will apply a duty of 25% on products of Canada and Mexico and 10% on products of China. These duties represent a tax on the value of the goods that must be paid by the importer.
If your company is importing goods from one of these jurisdictions, then you will need to make sure that the proper tariff codes are declared, and the duties are paid. Typically, the importer must make sure that the import-declarations identify the base tariff code for the good in question, and also identify any additional special tariff codes, such as the codes for these country-based tariffs. The proper tariff codes for these additional tariffs have not yet been published, but we hope that we will be able to identify and publish them soon for your benefit.
These tariffs will apply to aircraft, engines and parts that are manufactured in Canada, China or Mexico (in addition to all other goods from those jurisdictions). Normally, most aircraft parts are imported into the United States duty-free, so the duties imposed by the new tariffs will be a significant change.
Canadian aerospace product examples include (this is not a complete list!):
Bell helicopters manufactured in Mirabel, Quebec
Bombardier Aircraft
De Havilland Aircraft of Canada
Diamond Aircraft
Pratt & Whitney Canada Engines
In 2023, the Canadian aerospace manufacturing industry exported over $19B of aerospace products.
Many aircraft parts from China are already subject to a 25% tariff under tariff code 9903.88.01; the new 10% tariff will be in addition to the existing 25% tariff.
The new U.S. duties go into effect as of 12:01 a.m. eastern time on Tuesday, February 4, 2025.
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