By David Shepardson
WASHINGTON (Reuters) -The U.S. Commerce Department said on Friday it has opened a national security investigation into the import of commercial aircraft, jet engines and parts.
The “Section 232” investigation, which was opened on May 1 but not publicly disclosed previously, could be used as a basis of even higher tariffs on imported planes, engines and parts. Several airlines said they were unaware of the probe before it was disclosed late on Friday.
Airlines and manufacturers have been lobbying President Donald Trump to restore the tariff-free regime under the 1979 Civil Aircraft Agreement, under which the U.S. sector enjoyed a $75 billion annual trade surplus.
Most imported airplanes and components from around the world now face 10% tariffs. A deal in principle struck with the United Kingdom on Thursday will allow British-made Rolls-Royce engines to enter the U.S. duty-free, Commerce Secretary Howard Lutnick said.
The commerce department said on Friday it wants public comment within three weeks on a series of questions including on “the impact of foreign government subsidies and predatory trade practices on the competitiveness of the commercial aircraft and jet engine industry.”
Aerospace Industries Association CEO Eric Fanning said in response the group will engage with the department “to identify opportunities to strengthen our domestic supply chain while also maintaining the trade framework that has enabled our global leadership in aerospace.”
Airline executives have raised the possibility of returning leased planes and deferring aircraft deliveries.
Delta Air Lines is also unwilling to pay tariffs on aircraft deliveries.
U.S. assembled planes are not immune, as aircraft makers must pay levies on imported parts.
Boeing is paying 10% duty on supplies from Italy and Japan. United Airlines CEO Scott Kirby said last month that Airbus has had to pay tariffs on planes it is building in Alabama.
Airbus and Boeing did not immediately comment on Friday.
Aerospace industry officials say their situation differs from other industries, as their sector exports more than $135 billion of products annually.
GE Aerospace CEO Larry Culp told Reuters in April he met with Trump and explained to him how the industry’s decades-old duty-free status helped it produce the highest trade balance of any sector.
The company said on Friday it “will continue to work with the administration on efforts to preserve America’s global leadership in aerospace.”
Last month, the department opened a similar probe into the national security impact of imports of medium-duty and heavy-duty trucks and related parts.
(Reporting by David Shepardson; Editing by Marguerita Choy and Jacqueline Wong)
