TURBULENCE AHEAD FOR AVIATION INDUSTRY AMID NEW TARIFFS
May 5, 2025
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A week after President Trump announced that the United States was implementing reciprocal tariffs on 57 named countries, the administration changed course on April 9, 2025, and paused the application of reciprocal tariffs for 90 days, except for those imposed on China which were raised to an unprecedented 125 percent. While most reciprocal tariffs are on pause during negotiations between foreign trading partners and the U.S., the global baseline tariff of 10 percent will remain in full force. Importantly, the Trump administration did not rescind the elimination of the de minimis exemption for Chinese imports which was announced on April 2, 2025. The de minimis exemption previously allowed duty-free entry for low-value shipments under $800 yet those in the aviation industry, especially cargo carriers, should note that this exemption will be eliminated, effective May 2, 2025.
In response to these uncertain times and the looming threat of additional tariffs, airlines are pausing aircraft deliveries and revising expansion plans due to higher prices for aircraft parts and international goods. For instance, Delta recently announced plans to defer any aircraft deliveries subject to a tariff, and major Chinese carriers have stopped accepting Boeing aircraft deliveries as the U.S.-China trade war continues. If other airlines follow suit and delay fleet expansions, route capacity reductions could follow, leading to fewer flight options and increased costs for travelers.
For cargo carriers, tariffs have been and will continue to be a focal point in the months to come. The U.S. Customs and Border Protection (“CBP”) has issued Cargo Systems Messaging Service (“CSMS”) notices on each tariff implementation update in the Automated Commercial Environment (“ACE”) and will continue to communicate updates and related technical information via CSMS to system users. The ACE/CSMS updates can also be viewed here.
Readers should take note of the following recommended actions to consider during the 90-day pause of reciprocal tariffs:
- Review contractual obligations with vendors and suppliers to assess exposure to tariffs; Special attention should be paid to terms of cancellation in charter agreements including the circumstances under which a shipper can cancel a charter flight and any associated cancellation fees or penalties;
- Review ACE/CSMS system for updated tariff implementation messages;
- Monitor ongoing tariff negotiations between the U.S. and foreign trading partners such as China;
- Evaluate regulatory changes to exclusions, exemptions, or carve-outs that may impact cross-border transaction activity;
- Examine sector and country specific operations to mitigate tariff exposure where possible; and
- Be prepared for unexpected delays in customs clearance as tariffs may lead to increased scrutiny by CBP or backlogs in processing cargo clearance.
Please contact us if you have any questions about new U.S. tariffs and aviation-related impacts.
This Aviation Blog is intended to keep readers current on developments in the law. It is not intended to be legal advice. If you have any questions, please contact Evelyn Sahr at 202.659.6622 or esahr@eckertseamans.com; Drew Derco at 202.659.6665 or dderco@eckertseamans.com, Andrew Orr 202.659.6625 or aorr@eckertseamans.com; Jay Julien at 202.659.6648 or jjulien@eckertseamans.com; or Tyler Myers at 202.659.6642 or trmyers@eckertseamans.com, or any other attorney at Eckert Seamans with whom you have been working.
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