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Parts Excluded From Imminent Airbus Tariffs

The fallout of the World Trade Organization's tariff ruling will be painful for both OEMs and airlines.

Recent approval from the World Trade Organization for the U.S. to impose tariffs on imports of Airbus aircraft in response to EU subsidies has prompted a howl of anguish from U.S. carriers with big orders, but the ruling’s effect on the aftermarket is likely to be minimal.

“Finally, after 15 years of litigation, the WTO has confirmed that the United States is entitled to impose countermeasures in response to the EU’s illegal subsidies,” said U.S. trade representative Robert Lighthizer.

According to reports, the U.S. will impose a tariff of 10% on Airbus aircraft, but not on parts or aircraft sections, meaning that Airbus’s assembly site in Alabama is safe, as is Boeing, which has many EU-based parts suppliers.

Likewise, it seems as if U.S. MRO providers will still be able to source new spare parts from European providers without having to bill their customers more.

For airlines such as Delta, however, that is scant consolation given that it has almost 250 aircraft on order with Airbus.

The airline predicts that the tariffs will hit its profits and has also warned that Boeing does not have the capacity to replace Airbus orders across U.S. airlines with its own.

The U.S. intends to impose the tariffs from Oct. 18, although Lighthizer has left the door open for a negotiated settlement that might avoid them.

“We expect to enter into negotiations with the European Union aimed at resolving this issue in a way that will benefit American workers,” he said.  

Naturally, Airbus is also urging talks between the U.S. and EU to resolve the matter, while also noting in a statement that tariffs “will create insecurity and disruption not only to the aerospace industry, but also to the broader global economy.”

The EU, meanwhile, has argued that tariffs would be counterproductive given that it expects to win its own approval from the WTO next year to impose tariffs on Boeing aircraft over illegal aid to its U.S. rival.

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