Navigating the Changing Tariff Landscape in Civil Aviation Transactions

Historically, most civil aircraft, engines and parts could be imported into the U.S. duty-free. The U.S. is a signatory to the 1979 Agreement on Trade in Civil Aircraft, under which participating countries agreed to eliminate customs duties on civil aircraft, engines and most parts and components. This "zero-for-zero" framework supported highly integrated global supply chains in which components routinely cross borders multiple times before final assembly.

That changed in early 2025 when the U.S. began imposing substantial tariffs under the International Emergency Economic Powers Act (IEEPA) on foreign-made aircraft, engines and parts. These tariffs interrupted supply chains and had unforeseen consequences for existing contracts, many of which did not clearly allocate responsibility for new duties among manufacturers, lessors, lessees, buyers, sellers and maintenance providers.

The U.S. Supreme Court on February 20, 2026, held that IEEPA does not authorize the president to impose tariffs. The Court affirmed the decisions of the Court of International Trade and U.S. Court of Appeals for the Federal Circuit and remanded the case to the lower courts. The administration has since imposed new tariffs under other statutory authorities but as discussed below, civil aviation has largely been exempted.

When Do Tariffs Potentially Apply?

Aircraft entering the U.S. may be imported as merchandise for consumption in the U.S. (subject to the same treatment as any other import) or as an instrument of international traffic simply carrying passengers or cargo into the U.S. Whether a tariff applies depends on whether an aircraft, engine or part is actually entered into U.S. customs territory as an import.

Tariffs may apply when:

• importing non-U.S. aircraft or engines for sale or lease in the U.S.
• reimporting aircraft or engines after foreign repairs or upgrades
• returning aircraft or engines to the U.S. for long-term storage
• importing aircraft or engines for a pre-purchase inspection with the intent of a U.S. sale or lease
• temporarily importing aircraft or engines for repair

By contrast, tariffs generally do not apply when:

• aircraft enter U.S. airspace or operate on international routes as part of routine flights carrying passengers or cargo
• an aircraft or engine is exported from the U.S.

Because the analysis is fact-specific, parties should evaluate the customs treatment of aircraft or engines before the movement occurs, particularly in transactions involving deliveries, lease returns, lessee transitions and maintenance events.

Good News but Uncertainty Regarding Future Tariffs

Although new tariffs have been imposed, or are being considered, under other authorities, civil aviation has largely remained exempt. For example:

• New Section 301 duties of 10 percent or 12.5 percent imposed over the summer exclude civil aviation.
• New U.S. tariffs on Canadian products and Canada's counter-tariffs exclude civil aviation.
• On July 9, 2026, the president issued a proclamation concluding the Section 232 investigation on commercial aircraft and jet engines that the U.S. Department of Commerce initiated in May 2025. Unlike many other industries subject to Section 232 review, the civil aviation industry almost universally opposed the imposition of tariffs in that investigation, and the proclamation imposed no tariffs at this time, a significant win for the industry. However, the proclamation found that certain foreign practices harm the U.S. commercial aircraft manufacturing industry and called for negotiations with trading partners to "adjust the imports of commercial aircraft, engines, and their associated parts." As a result, the authority to impose tariffs or take other action under Section 232 remains available and should continue to be monitored.

Lingering Tariff Issues

Despite these broad exemptions, several issues remain that parties should keep in mind:

• Ancillary Equipment. The exemptions apply only to civil aircraft, engines and parts. Tariffs may still apply to ancillary equipment, such as ground-support equipment, test equipment and engine stands.
• Surcharges. Some vendors and manufacturers continue to add tariff surcharges to offset their increased costs. In addition, tariffs on steel, aluminum and other raw materials used in manufacturing may themselves drive up costs even where the finished product is exempt.
• IEEPA Refunds. U.S. Customs and Border Protection (CBP) has established a process for importers of record to obtain refunds of IEEPA tariffs paid and has already thousands of refunds where entries were not yet fully liquidated. Where an entry has been fully liquidated, however, the importer of record may need to bring an action in the Court of International Trade to recover a refund. A separate complication is that only the importer of record is entitled to the refund, not necessarily the party that ultimately paid for the duties. Whether another party, such as a buyer or lessee, can seek reimbursement from the importer of record will depend on the parties' contractual and business relationships.
• Classification. An item may be classified under a Harmonized Tariff Schedule of the United States (HTSUS) number not associated with civil aviation. In those cases, the customs broker must claim the civil aircraft special program indicator "C," in accordance with General Note 6 to the HTSUS, to secure duty-free treatment.

Potential New Issues

• Threatened Ban on Bombardier Imports. On September 7, 2026, the president threatened to ban imports of Bombardier aircraft. The Kansas congressional delegation, Bombardier and others have raised objections. Although no action has been taken, the threat illustrates that civil aviation remains exposed to sudden trade measures.
• European Investment Bank Financing of Airbus. On June 29, 2026, the European Investment Bank (EIB) announced an unprecedented 3 billion euro financing package for Airbus. This occurred just days after the European Union agreed to indefinitely suspend retaliatory tariffs on the U.S. related to a longstanding Airbus-Boeing World Trade Organization (WTO) dispute. On July 21, 2026, the press reported that Boeing asked the U.S. Trade Representative (USTR) to investigate, and the USTR indicated that it is looking closely at the matter. Notably, EIB financing was one of the alleged unfair trade practices in the WTO dispute. The financing therefore has the potential to reopen the WTO dispute and tariffs related to large commercial aircraft.
• Enhanced Enforcement. The U.S. government has ramped up enforcement against tariff evasion and trade fraud, including pursuing criminal charges for violations. For example, the U.S. Department of Justice has established a Trade Fraud Task Force in conjunction with CBP and the U.S. Department of Homeland Security.

Practical Takeaways

Although the current tariff environment is favorable for the civil aviation industry, the volatility of the past 18 months and potential for future change mean that companies involved in civil aircraft transactions should remain alert to these issues and risks. For more information or questions regarding the potential impact of these developments, Holland & Knight's International Trade and Aviation teams are available to assist.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.