Story ID: 
Tariffs Raising Uncertainty for Aviation Industry
By: Kerry Lynch
Caption: Plans for tariffs follow through on campaign pledge but are evolving
Word Count: 706
The aviation community is working to assess how the newly imposed and evolving tariffs will affect businesses. On Saturday, the White House announced that it would impose a 25% additional tariff on imports from Canada and Mexico and 10% from China, following through on a campaign pledge President Donald Trump made leading up to the November elections. Canadian officials have stated they would equally impose a 25% tariff on U.S. imports. Officials from Mexico and China also have been exploring retaliatory measures.
However, while originally set to take effect at midnight on Tuesday morning, the White House today has indicated plans to push off implementation of the tariffs on goods from Mexico by a month after leaders from the southern nation reportedly promised to send 10,000 national guard members to beef up security at the border. In addition, a dialogue between the White House and Canadian Prime Minister Justin Trudeau is believed to continue today.
While tariffs typically must be authorized by Congress, the White House has some latitude to impose them under the International Emergency Economic Powers Act (IEEPA), and on Saturday it noted that the “extraordinary threat posed by illegal aliens and drugs, including deadly fentanyl, constitutes a national emergency” under that statute.
In its justification, the White House noted: “While trade accounts for 67% of Canada’s GDP, 73% of Mexico’s GDP, and 37% of China’s GDP, it accounts for only 24% of U.S. GDP. However, in 2023 the U.S. trade deficit in goods was the world’s largest at over $1 trillion.”
Analyst Jefferies noted that Canada, Mexico, and China account for roughly 40% of U.S. imports. However, less clear is how this will apply to aviation products. Tariff specifics are expected to be released through the Federal Register, Jefferies said, “although in many cases, suppliers may be protected by The Agreement on Trade in Civil Aircraft for aircraft and engines. There are likely no multiple/repeat tariffs for movement of components into a larger assembly.”
Montreal-headquartered Bombardier said on Monday that it was carefully reviewing both the U.S. tariffs and proposed Canadian counter-tariffs. “We have worked on multiple scenarios that will help us face this situation, and we will take the coming days to complete our analysis,” the company said in a statement, adding that it would provide further updates later this week when it releases its 2024 year-end financial results.
Canada and Mexico are two of the American aerospace and defense industry’s largest trade partners, the Aerospace Industries Association pointed out, adding that it was assessing the potential impact.
“The Aerospace Industries Association supports the Trump administration’s goal of making our country more secure and prosperous, and we value our long-standing role in achieving these objectives as a top exporting industry and a partner in providing the most cutting-edge equipment and aircraft for our troops,” said Dak Hardwick, AIA v-p of international affairs.
U.S. Senator Maria Cantwell (D-Washington), the ranking Democrat on the Senate Commerce Committee, reacted to the tariff announcement, stating: “President Trump should not start trade wars that hurt American manufacturers, consumers, and farmers, especially when food prices and interest rates are so high. After two weeks in office and lots of executive orders, where are the administration’s ideas to lower costs for American families? I hope the President will work with Congress on opening new markets, growing U.S. exports, and using the EXIM Bank to compete with China, instead of driving up prices at the grocery store and gas pump. I want an export strategy—one that maximizes opportunities to sell American products overseas.”
Law firm Pillsbury Winthrop Shaw Pittman noted that it’s rare to use the IEEPA to impose tariffs. “The tariffs mark a significant shift in U.S. trade policy, with broad economic and geopolitical implications,” the firm said in its Global Trade and Sanctions Law blog. “By invoking IEEPA to justify tariffs, the administration is expanding the use of national security authorities in ways not previously tested. In order to respond, businesses should closely monitor enforcement developments, tariff mitigation strategies, and potential legal challenges, and remain prepared to adapt to evolving retaliatory measures.”