Reports indicate that certain UK plane components are likely to be exempt from US import duties due to an evolving trade deal with the Trump administration. US Secretary of Commerce Howard Lutnick noted that, under this agreement announced last week, Rolls-Royce and similar aircraft engine parts can enter the US market without facing tariffs.
Interestingly, the exemption wasn’t highlighted in the five-page agreement document that outlines the terms of this “economic prosperity trade.” British corporate secretary Jonathan Reynolds mentioned to the Sunday Times that the broader aerospace industry has “specific guarantees of zero tariffs” enshrined in the deal.
This agreement is significant for the UK’s aerospace sector, valued at £400 billion and responsible for 450,000 jobs. Moreover, it holds importance for the US, as Boeing relies on regular parts supplies for Rolls-Royce engines destined for commercial aircraft, alongside US-based repair facilities.
On Thursday, Lutnick mentioned that an unnamed British company plans to purchase a Boeing aircraft valued at $10 billion (£7.5 billion). The following day, British Airways owner IAG confirmed the acquisition.
The anticipated contracts for aerospace trade arise amid recent US-UK trade measures that have alleviated pressures in the automobile and steel industries, addressing concerns of unemployment. While some specifics remain unclear, the deal includes reductions in car duties, with the possibility of lowering rates from 27.5% to 10% for vehicles exceeding 100,000 in annual exports, and zero tariffs on steel.
UK ambassador Peter Mandelson stated that this agreement quickly averted potential job losses at the Jaguar Land Rover facility in the West Midlands. Both Reynolds and Prime Minister Kiel Starmer aim to increase the quota for British-made car exports beyond the initial 100,000 set in the deal, as there are concerns about limiting UK’s export potential.
The prospective aerospace arrangement comes after the US initiated an investigation on May 1 to assess whether imported aircraft, jet engines, and parts might threaten national security. A study looking into the intensity of US imports and potential foreign government subsidies was expected to lead to increased tariffs.
Despite this, the aerospace and aviation industries have been advocating for the continuation of a longstanding treaty that permits tax-free trade of aircraft and parts across borders. The Bureau of Business and Trade has been approached for further comment.
