New tariffs could create new opportunities for the FAA-PMA community to support U.S. MROs and air carriers.
The President has threatened a new tariff on products of the EU. This has the potential to dramatically increase the cost of Airbus parts, and other aerospace products from the EU. This could create new opportunities for PMA companies to support the U.S. market with affordable aircraft parts.
The current tariff standards apply a 10% duty to products of the EU (up from duty-free treatment before the current trade wars started). This means that the importer is responsible for paying 10% of the value of the parts to the U.S. government as a tariff. This is typically in addition to any other tariffs that may apply to the transaction. A new FAA-PMA part that is a product of the U.S. is typically not subject to one of these U.S. tariffs.
U.S. tariffs on products of the European Union are scheduled to increase to a 20% duty rate on July 9, 2025. Yesterday, the administration threatened to increase US tariffs on products of the EU to 50%. The threatened date for this is June 1. If the administration carries-through on this threat, then it could reflect a dramatic increase in the cost of aircraft parts from the EU.
FAA-approved PMA parts have always been a supply-chain enhancing alternative to parts produced under production certificate or Production Organization Authorization. FAA-PMA parts are typically less expensive than the PC/POA alternatives. With the new tariffs on products of the EU, the price difference between FAA-PMA parts and the EU POA alternatives becomes even more pronounced.
Obviously, price increases occasioned by U.S. tariffs have the potential to adversely impact the U.S. civil aviation market:
- U.S. aircraft parts distributors will have to pay the increased duty rates on aircraft parts that they import
- This could affect U.S. repair stations who have to pay higher prices for aircraft parts that are products of Europe or other (tariffed) foreign locations. This could make it difficult for them to remain competitive against non-U.S. repair stations who do not have to pay those same duties on aircraft parts.
- This could impact air carriers who will pay higher prices for maintenance. It could also make it difficult for U.S. air carriers to remain competitive against non-U.S. competitors, because the non-U.S. competitors may not have to pay those tariffs for parts acquired and installed outside the United States.
- This could have a downstream effect on the affordability of air travel for Americans.
FAA-PMA parts that can replace the Airbus and other EU-sourced alternatives become a much more affordable alternative. The latest trend has been for FAA-PMA companies to identify parts with reliability problems or supply-chain problems, and fix those problems, so that the PMA manufacturer is providing additional value to the air carrier or MRO buying and installing the PMA part. But increases in prices occasioned by the U.S. tariff schedule could shift U.S.-based PMA companies back to researching and developing PMA alternatives for the entire range of EU-based aircraft parts.