NAFA member, David G. Mayer, Partner with Shackelford, McKinley & Norton, discusses how the ever-shifting U.S. strategy adds complexity and costs to business aircraft transactions.
The new or threatened tariffs announced by the Trump Administration and other countries may cost more than you realize when buying and financing private aircraft. The on-again, off-again U.S. tariff activity has roiled the U.S. financial markets, triggered retaliatory tariffs, alarmed aircraft stakeholders, and created wide uncertainty in global trade.
The Trump Administration has imposed, modified, and/or delayed the imposition of tariffs on specific countries to achieve certain foreign policy and economic goals. To stop massive shipments of fentanyl into the U.S., the Administration has imposed tariffs on Mexico and Canada and a 20 percent tariff on Chinese-origin goods to make U.S.-origin products more price competitive with cheaper non-U.S. origin metal sellers. This tariff may affect the metals used by aircraft manufacturers (OEMs), repair facilities, and their suppliers.
Transacting Steps and Process
Purchasing an aircraft without addressing tariffs is not an option. It is imperative to rely on customs brokers, lawyers and other import/export experts in deal teams to conduct a real-time analysis of potential tariffs, including direct and retaliatory tariffs from the U.S., Canada, or Mexico.
Their objectives should include determining the application, percentage, and effective dates of the tariffs on the aircraft being purchased. Second, they should calculate the tariff based on the purchase price if tariffs apply. The analysis should consider such tariff-based factors as the country of origin or transformation of an aircraft or specific product codes under the U.S. Harmonized Tariff Schedule (HTSUS). HTSUS is the primary resource for identifying tariff rates on aircraft imported into the United States. Third, they should try to structure the importation timing and terms to minimize the tariff cost.
As a byproduct of tariffs, the parties should brace for higher transaction costs and processing delays from the pre-tariff duty-free norm. The deal team will also negotiate purchase or financing documentation and interact with U.S. Customs and Border Protection officials.
This article was originally published by AIN on March 14, 2025.