Global Tariffs: Implications for the Aviation Industry

Disclaimer: This content was accurate as of May 21, 2025, but laws, guidelines, or circumstances may have changed. Please consult more recent updates for the latest details or contact Joyce Adetutu, Jason Fleischer, Jeffrey Jakubiak, Stephen Josey, Michael Joyce, Jim McGovern, or Kathy Pakenham.

The tariff policy implemented by the Trump administration in April 2025 marks a significant shift for the aviation sector by ending long-standing duty-free status in aircraft trading. As a result, U.S. manufacturers and airlines will now face increased costs on the importation of aircraft, in the case of airlines, and related parts and components, in the case of manufacturers. Structurally, airlines typically act as the importers of record and assume responsibility for duties and fees arising on importation of a foreign-manufactured aircraft and accordingly U.S. airlines will be impacted if importing aircraft into the U.S. However, the greater costs of aircraft manufacturing caused by tariffs imposed on foreign-manufactured parts and components is likely to lead to higher prices and market values for new U.S.-manufactured aircraft. Importantly, tariffs are effective as of delivery of aircraft and so these affect advance orders.

Reports indicate that key airlines, including Ryanair, are reconsidering their procurement pipelines and the feasibility of long-term order books with manufacturers in the United States. Ryanair’s order book of Boeing deliveries is valued at over $30 billion and comprises 330 aircraft for delivery through 2034. Following the introduction of a baseline tariff on Chinese imports of 145%, a Chinese airline refused delivery of new Boeing aircraft and at least three aircraft were repatriated to the United States. As a result of the ongoing trade negotiations between China and the United States, the baseline tariff has been reduced to 30% for a 90-day period, and China has reportedly removed the delivery ban with officials said to have informed airlines and government agencies that Boeing deliveries can resume. Boeing historically sent 25% of its ex-factory aircraft to China, and although its share has diminished as Airbus increased its position in China, Boeing’s order backlog with Chinese airlines stands at 10% of its pipeline, and Boeing had planned to deliver around 50 new aircraft to China during the rest of 2025. Globally, 80% of Boeing’s delivery pipeline for 2025 is for non-U.S. customers.

The EU is considering imposing a tariff on Boeing imports if the United States persists with its 10% tariff on EU-manufactured aircraft, parts and components. About €10.5 billion of U.S. aircraft were sold to EU airlines and aircraft leasing companies in 2024 alone. Airbus is somewhat insulated as it has U.S. manufacturing facilities for some of its narrow body aircraft, b part and component supply chains cross multiple countries and continents, and all wide body aircraft are made in the EU.

As part of the recently announced UK-US trade deal, Rolls-Royce engines will be exempted from U.S. tariffs. The engines are manufactured in the UK and will be allowed to enter the United States tariff-free. Rolls-Royce engines are used on some models of aircraft manufactured by Boeing. As part of the trade deal, the UK is slated to buy $10 billion in Boeing aircraft. Interestingly, shortly after confirmation of this deal, British Airways owner IAG announced a new order for 32 Boeing 787-10 aircraft, and 21 Airbus A330-900neo aircraft. This adds to the 149 Boeing aircraft backlog for UK purchasers.

With tariff policies remaining in flux, anecdotally, industry participants are in holding patterns in the hope of more definitive decisions by the Trump administration. Ultimately, if tariffs persist, the increased costs of flying will be absorbed by consumers.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.