The U.S. Department of Commerce’s Bureau of Industry and Security has posted a draft notice of a national security investigation of imports of commercial jets, jet engines and parts for both, under section 232 of the Trade Expansion Act of 1969, by part 705 of the National Security Industrial Base Regulations.
The notice will be published in the Federal Register on May 13, but the draft is already available. According to the draft notice, the Secretary of Commerce launched the Section 232 investigation on May 1, though it was not listed on the Bureau’s page at the time of writing.
The U.S. has listed six open Section 232 investigations into the imports of copper, timber and lumber, semiconductors and semiconductor manufacturing equipment, pharmaceuticals and pharmaceutical ingredients, trucks, and processed critical minerals and derivative products.
After its official publication, the commercial jet, engines and parts notice will be open to public comment. The department will seek comments, data, analysis and information on the following:
- The current and projected demand for commercial aircraft and jet engines and parts for both.
- How far domestic jet, engine, and parts production can meet domestic demand.
- How far the domestic market relies on the foreign supply chain and major exporters.
- The concentration of U.S. imports among a small number of suppliers and the risks of a limited foreign supply chain.
- How foreign government subsidies and “predatory trade practices” may impact competition for jets, engines and parts.
- The economic impact of any “artificially suppressed prices..due to foreign unfair trade practices and state-sponsored overproduction.”
- The potential of export restrictions and the “ability of foreign nations to weaponize their control over supplies.”
- The feasibility of increasing domestic capacity for domestic production of commercial aircraft, jet engines and parts.
- The impact of current trade policies on domestic production and other relevant factors.
The investigation will broadly impact European suppliers, the main competitors of U.S. suppliers in this sector.
Commercial Jets Rely On A U.S. And European Duopoly
Commercial aircraft, engines, and aviation parts increasingly rely on a limited international supply chain, primarily split between the U.S. and Europe. However, the U.S. still holds a significant market share advantage.
Boeing and Airbus are the world’s two dominant manufacturers of new commercial aircraft. Airbus holds a significant lead on total backlog with 8,652 aircraft compared to Boeing’s 6,197 as of February. That said, Airbus’ backlog advantage is mainly on narrowbody planes (7,696 compared to Boeing’s 4,747), and some of Airbus’ narrowbodies are built in the U.S.
Boeing has a dominant share of the international widebody market with a backlog of 1,450 compared to Airbus’ 956. Any retaliatory tariffs imposed on Boeing long-haul aircraft might impact international airlines’ decisions for future orders.
U.S. Controls Lion Share Of Jet Engine Production
Jet engine manufacturing is controlled by four manufacturers: CFM International, Rolls-Royce, Pratt & Whitney, and General Electric. The French and American conglomerate CFM International (39%) and the U.S. Pratt & Whitney (35%) have the dominant share of the market, while British Rolls-Royce (12%) and U.S. General Electric (14%) hold the balance. The U.S., therefore, has a significant lead in jet engine manufacturing, accounting for nearly 88% of the market. Though some CFM engines are built in France, GE Aerospace, which holds a 50% share of CFM, announced a $1 billion investment in U.S. factories in March. It plans to hire 5,000 workers to support production and assembly of narrowbody CFM LEAP engines.
Tariffs Impacting Airlines And Manufacturers
Airlines and manufacturers have been contending with the impact of new tariffs on aircraft imposed by the Trump administration. Recently, Delta Air Lines took delivery of a new Airbus A350-900 plane via Japan as a work-around.
According to data from aviation analytics firm ch-aviation, U.S. airlines Delta and United currently have 79 widebody aircraft on order with Airbus.
Airbus’ CEO Guillaume Faury has said the company will not cover the costs of tariffs for its U.S. airline customers. Airbus has also backed a plan for Europe to impose a $125 billion retaliatory tariff package, which could impact Boeing aircraft and U.S.-manufactured jet engines imported from the United States.
While Airbus maintains manufacturing facilities in the U.S. for its narrowbody Airbus A220 and some A320 family aircraft, these may also be vulnerable to U.S. tariffs imposed on the parts it imports to the U.S. for production.
IAG Orders 71 New Long-Haul Aircraft Split Between Airbus And Boeing
Following a trade deal between the U.K. and the U.S., British Airways owner International Airlines Group disclosed in its Q1 financial report on Friday that it will buy up to 71 long-haul planes from Airbus and Boeing. IAG placed a new order for 32 Boeing 787-10 Dreamliner planes and 21 Airbus A330-900neo planes for delivery between 2028 and 2033.
The company also revealed that it had exercised options in March for six additional Airbus A350-900s, six A350-1000s and six Boeing 777-9s.
