Aircraft parts imported into the United States will once again enjoy duty-free status when they are products of Japan and are covered under the Agreement on Trade in Civil Aircraft.
The new tariff code for aircraft parts that are products of Japan is 9903.96.02. It exempts the parts from the new chapter 99 tariffs. As with other aircraft parts duties, this only provides duty-free treatment to the extent that the parts are covered under the Agreement on Trade in Civil Aircraft. Some things that we consider to be aircraft parts (for example: bearings and fasteners) may be outside of the scope of the Agreement on Trade in Civil Aircraft, in which case they may be subject to the “normal” chapter 99 duties on goods of Japan.
Today the White House issued an executive order describing the new tariff agreement with Japan.
The new executive order establishes a baseline 15% tariff on goods of Japan. But it appears that aircraft parts produced in Japan may be authorized for duty-free entry into the United States.
The new executive order appears to recognize the Agreement in Trade on Civil Aircraft (“ATCA”) as providing for duty-free treatment of civil aviation products from Japan. The language is complicated because it directs that “the tariffs imposed through the following Presidential actions and subsequent amendments to those actions shall no longer apply.” The clause lists four Presidential actions. The problem is that the new executive order is not described as a specific amendment to those four Presidential actions, although it cross-references them. This leaves the administration some room to decide that the ATCA doesn’t really exempt aircraft parts from the 15% duty on goods of Japan.
But it appears that the current intent of the Administration is to recognize the ATCA duty-free treatment of civil aircraft parts that are the product of Japan. If this is implemented as we expect, then Japan will join the United Kingdom as only the second jurisdiction in which the ATCA is allowed to once-again provide duty-free treatment to civil aircraft parts, overcoming the Chapter 99 tariffs. It will take a few days for this to get implemented in the HTSUS, and when it is then the implementation will clarify the impact on aircraft parts.
In addition, the White House executive order announced a $550 billion investment in the United States by Japan. The Japan Times reported that 1-2% of this will be direct investment and the remainder will be provided in the form of loans and loan guarantees in the United States.
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!
You must be logged in to post a comment.