The US Department of Commerce announced on Friday (May 9) that a national security investigation has been launched into imported commercial aircraft, jet engines, and components. This newly announced “Section 232” investigation, initiated on May 1st, could serve as the basis for imposing higher tariffs on imported aircraft, engines, and parts.
Several airlines have stated that they were not aware of this investigation before the news was made public on Friday. Airlines and manufacturers have been lobbying President Trump in hopes of reinstating the duty-free status under the 1979 Civil Aircraft Agreement. According to the agreement, the civil aviation industry in the US enjoys a $75 billion trade surplus annually.
Currently, most imported aircraft and components from around the world face a 10% tariff. US Commerce Secretary Howard Lutnick announced on Thursday that a preliminary agreement reached with the UK will allow Rolls-Royce engines from the UK to enter the US market duty-free.
The US Department of Commerce stated on Friday that it hopes to solicit public comments on a range of issues within three weeks, including the impact of foreign government subsidies and unfair trade practices on the competitiveness of the commercial aircraft and jet engine industries.
Eric Fanning, CEO of the Aerospace Industries Association (AIA), responded by stating that the organization will collaborate with the Department of Commerce to explore opportunities to strengthen domestic supply chains while “maintaining the trade framework that keeps us globally competitive in aerospace.”
Even US-assembled aircraft are not exempt from tariffs, as aircraft manufacturers must pay tariffs on imported components. Boeing is paying a 10% tariff on products supplied to Italy and Japan. United Airlines CEO Scott Kirby stated last month that Airbus also has to pay taxes on aircraft manufactured in Alabama.
US aerospace officials point out that their industry is different from others because their annual export turnover exceeds $135 billion. Larry Culp, CEO of GE Aviation, explained during a meeting with President Trump in April how the tax-exempt status enjoyed by the industry for decades has helped it achieve the highest trade surplus in all industries.
The company stated on Friday that it will “continue to work with the government to strive to maintain America’s global leadership in the aerospace field.”
Last month, the US Department of Commerce launched a similar investigation to assess the impact of imports of medium and heavy-duty trucks and related components on national security.