Background on the Investigation
The United States Department of Commerce has initiated an investigation into commercial aircraft, engines, and airparts, which may result in the imposition of tariffs. The investigation was launched by Secretary of Commerce, Howard Lutnick, on May 1 under Section 232 of the Trade Expansion Act of 1962, as announced in a Federal Register notice on May 5.
Importance of the Investigation
In 2024, the United States imported aerospace parts and industry products worth $57.719 billion, marking an 11.7% annual growth. Mexico ranked sixth in these exports, with $3.125 billion, an increase of 9.8% annually.
Key Areas of Focus
- Current and projected demand for commercial aircraft, jet engines, and related airframe components in the United States.
- The extent to which domestic production can meet this demand.
- Role of foreign supply chains, especially from major exporters, in satisfying U.S. demand for these products.
- Concentration of U.S. imports of commercial aircraft, jet engines, and related airframe components from a limited number of suppliers and associated risks.
Leading Exporters
Canada led U.S. imports of aerospace parts and industry products in 2024, with $13.151 billion, followed by France ($9.973 billion), Germany ($7.435 billion), the United Kingdom ($5.983 billion), and Japan ($3.662 billion).
Coalition for Aviation Supply Chain Integrity
In February 2024, major aerospace companies formed the Coalition for the Integrity of the Aviation Supply Chain, including aircraft manufacturers, engine makers, and airlines. Their goal is to prevent unauthorized parts from entering the supply chain, enhancing security and reliability in the aerospace industry.
Future Supply Chain Challenges
Deloitte predicts that supply chain issues may persist in 2025. As global trade dynamics shift and international trade with the U.S. moves towards countries like Mexico, aerospace and defense companies are expected to focus on improving supply chain visibility. This may involve more digital technologies for tracking material flow from upstream suppliers.
Key Questions and Answers
- What is the investigation about? The US Department of Commerce is investigating commercial aircraft, engines, and airparts demand and supply in the United States, as well as foreign supply chains’ role.
- Why is this investigation important? Understanding the current and projected demand, domestic production capabilities, and foreign supply chain influence can help ensure a stable and secure aerospace industry in the US.
- Who are the leading exporters of aerospace parts to the US? Canada, France, Germany, the United Kingdom, and Japan are among the top exporters.
- What is the Coalition for Aviation Supply Chain Integrity? It’s a group of major aerospace companies working to prevent unauthorized parts from entering the supply chain and strengthen industry security.
- What future challenges does the aerospace supply chain face? Deloitte anticipates persistent supply chain issues in 2025, with companies likely adopting more digital technologies for better material flow tracking.
