By Allison Lampert, David Shepardson and Gabriel Araujo
Feb 24 (Reuters) – Brazilian planemaker Embraer, U.S. airlines and the broader commercial aerospace sector are poised to benefit from the Trump administration imposing a revised tariff regime on Tuesday.
But aviation attorneys and industry executives urged caution, warning that shifting White House policy is still creating uncertainty.
Commercial aircraft, engines and aerospace parts are set to be exempt from the temporary 10% global import duty being introduced under Section 122 of the Trade Act of 1974, according to an annex to U.S. President Donald Trump’s executive order authorizing the tariff. The levy, which he later said would rise to 15%, was announced to replace tariffs struck down on Friday by the U.S. Supreme Court.
The global aerospace exemption is broader than already generous tariff carve-outs for the biggest industry exporters to the U.S. under earlier trade deals, including the European Union, Britain, Japan, Canada and Mexico.
Last July, Trump slapped a 50% tariff on most Brazilian goods to fight what he has called a “witch hunt” against former President Jair Bolsonaro, but he spared aircraft from the steepest penalties. Still, U.S. importers of Embraer business and regional jets had faced a 10% tariff.
The exemption for aircraft under Trump’s latest tariffs gives Embraer a boost, easing a disadvantage it faced against private jets from Canada’s Bombardier and France’s Dassault, which had been entering the U.S. duty-free.
“It’s actually very encouraging and quite good news for our industry,” Katie DeLuca, a Florida-based private aviation attorney with Harper Meyer, told a Monday webinar organized by the National Business Aviation Association.
The timing comes as the Brazilian planemaker is set to announce a new variant of its Praetor business jets on Tuesday, two sources familiar with the matter told Reuters.
Embraer, which declined to comment, had previously called the 10% tariff manageable but harmful.
Alaska Airlines said last July that it took delivery of two E175 regional jets after a short delay. The carrier said on Monday that its next E175 delivery was scheduled for this summer “so we have time to understand where the tariff landscape settles.”
SkyWest Airlines and American Airlines, which have both ordered Embraer’s E175 regional jets, did not respond immediately to requests for comment.
TARIFF CONCERN STILL LOOMS
Dave Hernandez, a U.S. business aviation specialist and attorney with Vedder, called the new tariffs a particular win for Embraer, but cautioned the Trump administration was conducting separate investigations into Brazil’s trade practices and commercial aerospace. Aviation also continues to face higher costs due to U.S. tariffs on materials used to make aircraft parts.
“It’s great that aircraft, engines, and parts are exempt from the Section 122 tariffs, but a real concern still exists that the steel and aluminum tariffs are increasing the ultimate costs of the aircraft, engines, and parts,” Hernandez said.
The change is creating a window for aircraft previously hit with tariffs, such as certain pre-owned business jets, to be imported duty-free into the world’s largest market for private aviation, experts said.
U.S. airlines could also take advantage of the new exemption to speed up the import of Embraer regional jets, industry sources said.
“Now it seems we have a window at least where we can import these aircraft free from tariffs,” said Tobias Kleitman, president of U.S.-based TVPX, which provides trustee and customs services.
“Question is how long that window is going to last. But it is a stunning change,” Kleitman told the NBAA webinar.
The movement comes as the Commerce Department is looking at risks to U.S. national security from imported goods under an investigation known as Section 232, which could be used to slap tariffs on imported planes, engines and parts.
Alex Krutz, managing director at U.S. aerospace and defense consultancy Patriot Industrial Partners, said he did not expect the 232 investigation to result in blanket tariffs on aerospace, given its current exclusion, along with prior exemptions for aircraft and parts in trade deals.
“I think it’s recognized within the administration that aerospace is a net exporter,” said Krutz, a former deputy assistant secretary for manufacturing at the U.S. Commerce Department.
(Reporting By Allison Lampert in Montreal, David Shepardson in Washington and Gabriel Araujo in Sao Paulo; Editing by Joe Brock and Jamie Freed)
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