As the global aviation industry continues to recover and evolve, a new challenge has entered the flight path: tariffs. Recent U.S. tariffs—particularly a 25% duty on imported steel and aluminum—are creating headwinds for aircraft manufacturers, buyers, and suppliers alike. These economic shifts aren’t just financial—they’re legal. For aviation professionals, understanding the legal implications is critical to avoiding costly disputes.

At Aero Law Center, we’re closely monitoring how these trade policies are impacting the legal landscape. In this article, we break down the immediate and long-term legal risks aviation stakeholders face and provide practical guidance on how to respond.

Contractual Chaos: Why Buyers and Sellers Need to Reevaluate Agreements

Tariffs have introduced a layer of uncertainty to existing and pending aviation contracts. We’ve seen:

  • Rushes to finalize deals before tariffs take effect
  • Renegotiations as buyers seek pricing adjustments
  • Legal disputes arising from cost increases

One of the most important tools in this environment is the price escalation clause. This provision allows for price adjustments when unexpected cost increases, like those caused by tariffs, occur. Without it, buyers might find themselves absorbing the additional costs or breaching contracts entirely.

Another key provision to revisit is the force majeure clause, often invoked when external events prevent contract fulfillment. However, courts interpret these clauses narrowly. Tariffs, being government actions rather than natural disasters, may not qualify unless explicitly included in the clause.

Legal Tip: Review your aviation contracts immediately. Ensure they include specific language addressing tariff-related risks, particularly around pricing and force majeure.

Supply Chain Shocks: The Ripple Effect of Tariffs

The impact of tariffs doesn’t stop at aircraft buyers and sellers. Aviation supply chains—from raw materials to final assembly—are facing significant disruptions.

Here’s what could happen:

  • Suppliers locked into fixed-price contracts may be unable to absorb tariff-induced cost hikes, leading to contract breaches.
  • Manufacturers may face delays if component parts become scarce or more expensive, risking penalties for late delivery.
  • Airlines and private buyers might experience postponed deliveries, triggering contractual claims or financial losses.

In many cases, aviation contracts include liquidated damages clauses for delayed delivery, further increasing manufacturers’ legal and financial exposure.

Legal Tip: Suppliers and manufacturers should work with legal counsel to audit existing contracts and assess whether pricing, delay penalties, and dispute resolution mechanisms are adequate.

International Trade Disputes on the Horizon

Tariffs are no longer just domestic policy—they’re becoming international legal flashpoints. With trade tensions rising among the U.S., Canada, and the European Union, aviation companies may soon find themselves entangled in WTO disputes or USMCA arbitration.

For example:

  • Bombardier and other manufacturers are exploring USMCA protections to bypass certain tariffs.
  • Governments could challenge tariffs through international tribunals, arguing that they violate free trade agreements.
  • Companies may need to relocate supply chains to countries not subject to the same trade restrictions.

These disputes can take years to resolve. In the meantime, aviation stakeholders must make strategic legal and operational decisions to stay compliant and competitive.

What Should the Aviation Industry Do Now?

To mitigate risks and prepare for ongoing volatility, aviation professionals should consider the following action steps:

Short-Term Recommendations:

  • Buyers: Finalize deals now to avoid future price increases.
  • Manufacturers: Audit contracts for cost pass-through and delay clauses.
  • Airlines and operators: Prepare contingency plans for potential delivery disruptions.

Long-Term Considerations:

  • Rising aircraft prices and longer delivery timelines may become the norm.
  • Expect a surge in contract litigation as economic conditions evolve.
  • Industry advocacy may increase as stakeholders push for tariff exemptions.

Final Approach: Be Legally Prepared for Economic Headwinds

The aviation industry is entering a new era of economic and legal complexity. Tariffs, trade disputes, and contract vulnerabilities have created a perfect storm that could lead to significant financial and operational consequences.

At Aero Law Center, we specialize in helping aviation professionals navigate these challenges with confidence. Whether you’re a buyer, manufacturer, supplier, or operator, our team can help you revise your contracts, assess your legal exposure, and develop strategies for a rapidly shifting marketplace.

Contact Aero Law Center today to schedule a consultation with our experienced aviation attorneys. Let’s work together to safeguard your operations against legal turbulence.