Trade Deal Holds Little Benefit for the PMA Community

The United States and China have signed a new trade agreement, identified as a “phase one” agreement.  For most of the aviation industry, very little changes. Aircraft parts imported into the United States that were subject to the 25% duty associated with the section 301 tariff, continue to be subject to the 25% duty levied on parts from China.

China has agreed to place orders for certain additional manufactured goods. The list of manufactured goods includes complete aircraft, but does not include aircraft parts.  So it does not facilitate an immediate increase in Chinese purchase of FAA-PMA parts.

The agreement does not appear to change the List One tariffs. The list one tariffs became effective on July 6, 2018 and placed an additional duty rate of 25% on $34 billion worth of goods from China. The list one goods include (but are not limited to):

• 40113000 (New pneumatic tires, of rubber, of a kind used on aircraft)
• 40121300 (Retreaded pneumatic tires, of rubber, of a kind used on aircraft)
• 84071000 (Spark-ignition reciprocating or rotary internal combustion piston engines for use in
  aircraft)
• 84091000 (Parts for internal combustion aircraft engines)
• 84111140 (Aircraft turbojets of a thrust not exceeding 25 kN)
• 84111240 (Aircraft turbojets of a thrust exceeding 25 kN)
• 84112140 (Aircraft turbopropellers of a power not exceeding 1,100 kW)
• 84112240 (Aircraft turbopropellers of a power exceeding 1,100 kW)
• 84118140 (Aircraft gas turbines other than turbojets or turbopropellers, of a power not
  exceeding 5,000 kW)
• 84118240 (Aircraft gas turbines other than turbojets or turbopropellers, of a power exceeding
  5,000 kW)
• 85030045 (Stators and rotors for electric generators for use on aircraft)
• 85030090 (Parts for electric generators suitable for use on aircraft)
• 85443000 (Insulated ignition wiring sets and other wiring sets of a kind used in vehicles, aircraft
  or ships)
• 88031000 (Parts of airplanes and other aircraft, propellers and rotors and parts thereof)
• 88032000 (Parts of airplanes and other aircraft, undercarriages and parts thereof)
• 88033000 (Parts of airplanes and helicopters, not elsewhere specified or included)

If you are importing parts in any of these categories from China, then they are still subject to the 25% tariff.

As a condition of the agreement, the United States agreed to cut certain (non-aviation) tariffs from a 15% duty to a 7.5% duty. This apppears to be limited to List 4A goods.  List 4A goods do not affect the 25% tariffs that apply to aircraft parts imported from China.  These modifications/reductions in duty rates are not part of the written agreement between China and the US, but the United States Trade Representative (USTR) published a notice to implement the reduction.  The notice is only found on the USTR website and has not yet been published in the Federal Register.