HI Uplift: Tough talk on tariffs (‘the most beautiful word’)
Tariffs are the "most beautiful word", according to President Trump. (Image courtesy of Wikimedia).
President Trump loves tariffs. He revealed the depth of that love in his appearance on The Joe Rogan Experience podcast, immediately before the US election. “To me, the most beautiful word … in the dictionary today and any, is the word ‘tariff’. It’s more beautiful than love; it’s more beautiful than anything.” But if tariffs are implemented will that love sour to pain for the helicopter industry?
Here’s what we know so far. Last week the president said he was considering introducing 25% on imports from Mexico and Canada – the US’s largest trading partners – from as early as next month. He has also threatened to impose 10% tariffs on imports from China (having previously talked of levying 60% tariffs last year) and is considering tariffs on EU imports.
While aviation-related exports from China to the US are not thought to be significant, the prospects of a trade war between the world’s two biggest economies make many economists gasp in horror. Also, leading helicopter manufacturers in the Americas, Europe and elsewhere could prove vulnerable to punitive tariffs.
For example, Bell Textron confirmed to us all commercial models are manufactured at its Commercial Assembly and Delivery Centre in Mirabel, Canada and sent to Piney Flats, Tennessee or its Prague Service Centre, Czech Republic for customisation.
‘Wild card’
Scott C Donnelly, the manufacturer’s chairman, president and chief executive described tariffs as “a wild card”. Speaking on Textron’s fourth-quarter earnings call this week he said: “We don’t know the specifics. Clearly, we have operations in Mexico. We have … a pretty significant operation in Canada, particularly on the Bell commercial side.
“A lot of the value of the dollars are things that go over from the US into Canada and then back. Assume those don’t get hit. But we do have some big important suppliers like Pratt Canada that sells a lot of engines to us in both rotor and fixed-wing. And we do have our Bell, Mirabel operations on the commercial side of Bell.” However, there are a lot of unknowns. “We’re just going to kind of hang in there and see how it plays out.”
Similarly, Airbus and Leonardo, while both operating US manufacturing and maintenance sites, also export helicopters and components to the US.
Some industry insiders have also wondered about the impact of tariffs on helicopter parts crossing the Canadian/US border multiple times. Pratt & Whitney Canada, whose engines power many popular models, is the obvious example of this.
‘Grave concern’
The General Aviation Manufacturers Association (GAMA) is not looking forward to the prospect of tariffs. It prefers to focus on the potential impact on aviation in general rather than specifically helicopters. “Given the gravity of this issue, we need to speak about this as it pertains to the entire GA industry and not just helicopters,” the association’s Andre Castro told us last month. “The impact of any proposed tariffs on aviation is of grave concern to GAMA and its members. Given the unique nature of aviation, new tariffs could compound challenges within the aviation supply chain and impact safety and commerce.”
US aviation has been strengthened by the Agreement on Trade in Civil Aviation, under which 32 signatory nations and the European Union have agreed to eliminate tariffs on aircraft, engines, parts and components, according to the organisation. Important too is the industry’s reliance on aviation safety agreements to facilitate safety and the flow of aviation products. “The institution of tariffs could have profound impacts on these agreements and introduce uncertainty into the marketplace to the detriment of manufacturers,” Castro told us.
A similar warning was voiced recently by the US’s largest aerospace trade group, Aerospace Industries Association – representing manufacturers such as Textron (owner of Bell), Boeing, General Dynamics, Honeywell Aerospace and Rolls-Royce North America plus many others.
“Trade continues to fuel economic growth and innovation in American aerospace and defence; over a 40-year period, the industry experienced over 2,000% growth in exports,” it said in a statement. Growth can continue if it’s recognised trade and tariffs are interconnected. “We are eager to work with the Trump administration to discuss where tariff policy may support our products while also ensuring the industry is empowered to continue growing in a way that supports the US national security needs and maintains our position as a leading high-technology, US-centred manufacturing sector.”
Also, last week, the CEO of AerCap – owner of helicopter lessor Milestone Aviation – one of the world’s largest aircraft leasing companies warned tariffs could damage vulnerable aerospace supply chains, according to Reuters.
Similar worries have also been voiced by Ed Bolen, president and CEO, National Business Aviation Association. He hoped action on tariffs would not impede international business aviation or its supply chains.
Breaking down
Less concerned about the impact of tariffs on the helicopter sector last month was Michael York, CEO of helicopter lessor GDHF. Asked if he worried about tariffs during an Aero Asset’s webinar, Helicopter Finance and Leasing Roundtable, York replied: “Not specifically – it’s an uncertain world.” The rules-based economic order of the past 40 or 50 years appears to be breaking down, he added, speaking before the warnings voiced by GAMA, AIA and most recently NBAA.
But free trade was a key driver of economic growth, he said. “We know that open world trade – without barriers – drives wealth creation and better standards of living. When you put tariffs on trade barriers in place that obstructs that.”
If tariffs are applied, there will be a clear consequence. “Tariffs are additional costs,” he says. “Certainly, they will have to be passed on to the customer in one way or form.” Other speakers appeared more concerned about the impact of rising interest rates and the state of US relations with China.
‘Lowest taxes … on earth’
Meanwhile, President Trump’s plans for tariffs remain unclear. An exception for imports related to aerospace and defence cannot be ruled out. Plus, yesterday, Trump told The World Economic Forum in Davos, Switzerland via video link: “Come make your product in America and we will give you among the lowest taxes as any nation on earth.”
Time will tell whether he intends to realise his promise/threat (depending on your perspective) to impose punitive tariffs on certain US imports – including helicopters and rotary parts.
But there’s no doubting the president’s commitment to the idea. Here’s what he told supporters at the Capital One Arena in Washington last week: “Tariffs are going to make us rich as hell. It’s going to bring our country’s businesses back.”
HI Uplift Dashboard: Helicopters for sale
Multi engine
- Total for sale/lease: 292 – one more than last week
- Percentage for sale/lease: 3.93
- Absorption rate: 4.53 months
- Total fleet: 7,436 – two more than last week.
Single engine
- Total for sale/lease: 440 – one more than last week
- Percentage for sale/lease: 3.81
- Absorption rate: 4.39 months
- Total fleet: 11,544 – 14 more than last week.
Source: Amstat, January 24th, 2025.22222222-9
