Tariffs Could Have Unintended Consequences On Bizav, Trade Groups Say

The Trump administration’s proposal of tariffs and the potential of reciprocating tariffs in response could have “an enormous impact with many unintended consequences” on the business aviation industry, the General Aviation Manufacturers Association (GAMA) says.

Negotiations between the U.S., Canada and Mexico on Feb. 3 put a 30-day pause on an additional 25% tariff on goods coming into the U.S. from the two countries in exchange for concessions on border and crime enforcement. Meanwhile, China has announced targeted tariffs to imports into the U.S. in retaliation for an additional 10% tariff levied on China’s goods coming into the U.S.

Trump has threatened to impose tariffs on imports from Europe as well.

“Tariffs would affect the intricate and very complex global supply chain that can take years to establish given that it relies on suppliers with unique capabilities that are highly regulated and therefore cannot be easily replaced,” GAMA said in a statement.

“Even in instances where alternative suppliers may exist, or could be created domestically, aviation manufacturers cannot rapidly shift to different sources or facilities without FAA regulatory approval, potentially compromising contracts, safety and compliance, quality and value to the consumer.”

Canadian-based Bombardier said that it is reviewing the U.S. tariffs and the proposed counter tariffs, the company said in a statement.
“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 statement said. 

Vertical Research Partners analyst Robert Stallard called the tariffs and resulting potential start of a trade war a risk to an otherwise positive global outlook in 2025.

Canada and Mexico are both closely tied to the U.S. aerospace industry.

For one, Pratt & Whitney Canada supplies engines to U.S. business jet manufacturers. At the same time CAE’s sale of multi-million dollar full-flight simulators into the U.S. from Canada could be impacted, analysts note. 

Bombardier’s largest market for business jets is the U.S. while the company is supplied by U.S. suppliers. Business aviation manufacturers, including Textron Aviation, Bombardier and Gulfstream, operate significant facilities in Mexico with products then being imported into the U.S. In August 2024, Gulfstream announced plans to build a new $19 million manufacturing plant in Mexicali, which will create 1,500 new jobs.

“Reciprocal tariffs would thus have a meaningful impact on the cost of goods for A&D companies, and logically have a negative impact on demand, with business jets looking particularly vulnerable,” Robert Stallard with Vertical Research Partners wrote in a note to investors.

U.S. aircraft manufacturers exported 490 piston, turboprop and jet aircraft in 2023 to other countries, or about 25% of the total number of aircraft produced, GAMA notes, valued at an estimated $5.2 billion. The U.S. aviation industry’s trade surplus and competitiveness benefits from generally being excluded from tariffs, from robust safety bilateral agreements between the U.S. and other countries. The arrangements have led to “stable and increased investment in research and development, engineering, advanced manufacturing processes and innovation," it says.

Tariffs can also impact the maintenance, repair and overhaul (MRO) sector, which employs almost 210,000 in the U.S., GAMA says. “If the parts and products used in the MRO work are subject to tariffs, it could jeopardize the viability of domestic MROs and their highly skilled workforce, given that repair station work may be moved by aircraft owners and operators to outside the U.S. due to increasing costs,” it says.

U.S. aviation manufacturing is in a global leadership position that can be improved by government policies and action focused on strengthening aviation safety agreements, policies and investments to boost innovation and measures to address supply chain challenges, GAMA says.

Business aviation is a vital link to the nation’s transportation system, a driver of the economy and a crucial component of the U.S. leadership in manufacturing, innovation and competitiveness, the National Business Aviation Association (NBAA) said in a statement. The industry supports more than a million jobs and nearly $250 billion in economic development.

“Critical to this essential industry is a complex, highly regulated global supply chain, supported by a number of bilateral agreements that are required to meet stringent safety standards, while ensuring the reliable flow of high specialized goods,” NBAA says. “Disruptions to this system have profound consequences and workarounds that meet the exacting regulatory requirements take months or years to establish.”