Le Bourget International Aerospace Show Faces Off Against U.S. Trade Woes
Air Show in Paris officially kicks off this week on Monday. - Airshow extravaganza at Le Bourget kicks off on Monday
Say goodbye to the usual rivals at the forefront of Le Bourget—Airbus and Boeing are being elbowed out by something far more daunting: U.S. trade policies.
This year's show is shaping up to be a rollercoaster, with intense concern mounting over potential high tariffs on the aerospace industry. Both giants in the skies have voiced their concern about the repercussions of these proposed tariffs for their respective markets.
Tariff Tensions
It all started with Section 232 investigations initiated by the U.S. into imports of commercial aircraft and parts. American aerospace companies are opposing this move, fearing it will trigger tariffs that could hit both Airbus and Boeing, though Airbus may have some buffer with its U.S. manufacturing facilities [1].
The Trump administration also imposed tariffs on EU-manufactured aircraft, parts, and components, instigating the possibility of EU retaliation with tariffs on Boeing imports. This trade war could swirl around like turbulence for the global supply chain, potentially jacking up consumer costs [2].
Stepping Stones for Peace
In a move to ease tensions, the U.S. and UK recently inked a deal that exempted Rolls-Royce engines from tariffs, reducing costs for Boeing aircraft using these engines [2][3]. Moreover, the deal promised zero-for-zero tariffs on aerospace products, which could help alleviate the strain for both Boeing and UK-based suppliers.
The 1979 Agreement on Trade in Civil Aircraft, which promotes a tariff-free environment for civil aviation products among participating countries, is also a hot topic at Le Bourget. This agreement has been indispensable to maintaining a level playing field, and will likely remain a discussion piece [3].
The Aviation Giants Brace for Impact
- Airbus: Straddling the border of severe implications, Airbus stands to potentially face tariffs on EU-manufactured parts if trade tensions escalate. Fortunately, its U.S. operations could help cushion the blow [2].
- Boeing: With the U.S.-UK trade deal shielding Rolls-Royce engines from tariffs, Boeing might benefit from reduced costs for aircraft utilizing these engines. Yet, it remains at risk of EU tariffs on Boeing imports if the trade conflict persists [2][3].
Taken together, these U.S. trade policies could create a twisting plot at the Paris Air Show, complicating negotiations and business deals as companies juggle tariffs and agreements. However, the zero-for-zero tariff policies and exemptions in some trade deals offer a glimmer of hope, providing a path for reduced tension, and potential benefits for both Airbus and Boeing.
- The European Parliament, deeply concerned about the potential impact of tariffs on the aerospace industry, has been closely monitoring the trade dispute between the U.S. and the European Union.
- Amidst the looming threat of a global trade war, the European Parliament has emphasized the importance of the 1979 Agreement on Trade in Civil Aircraft, which promotes a tariff-free environment for civil aviation products among participating countries, including those in Europe.
