Introduction

Aviation leasing / financing has always been dependent on cross-border flows of aircraft assets and capital. Geopolitical tensions and evolving trade dynamics have escalated this year and continue to impact practically on the sector. In particular, tariff escalations in the US and China adds complexity to long term investment decisions for aircraft lessors, operators and investors. So what is the current state of play and how should aircraft lessors be thinking about this now?

Leasing into the US

Under the US tariff framework introduced in April 2025, a 10% tariff applied to the lease of certain “non-US” aircraft imported into the United States. The tariff was assessed as a lump sum based on the “value of the lease”. However, there was significant uncertainty over how the “value of the lease” would be calculated in this context.

EU Agreement

Fast forward to late July 2025; and the US and EU agreed a trade deal (“July deal”) following months of trade negotiation and discussion. While the main headline arising from this deal was the 15% tariff on many EU exports to the US from 1 August; the deal was particularly important from an aviation perspective as well. Aircraft and aircraft parts were exempted from the 15% tariff. This is particularly important in the context of Airbus aircraft exports from the EU into the US. The July deal should also mitigate the risk of EU tariff escalations on import of US goods (directly relevant for Boeing aircraft being brought into the EU for example).

Questions remain however in relation to the period from April to August. Liable aircraft exports in that time period would have been exposed to the “original” 10% tariff in the US. It is possible that the July deal could present a measure of relief for such transactions (to the extent the counterparty is in the EU) but there has been no confirmation on this and so it should be monitored.

Non-EU Exporters

It’s important to remember the July deal only covers US-EU trade. Where aircraft or aircraft parts are being imported to the US from outside the EU; separate rules apply depending on the jurisdiction. For example, an Embraer (Brazilian) aircraft export to the US clearly does not benefit from the trade deal with the EU.

Leasing into China

The lease of aircraft into the Chinese market has also become more complex in 2025; particularly with respect to US aircraft (namely Boeing). The Trump administration recently extended a delay on higher tariff impositions on Chinese goods; with rates having been as high as 145% earlier this year. At the time of writing, China is imposing an additional tariff of 10% on all US goods imported into its territory.

Unlike the US, tariffs in China applicable to a lease are (in general) collected on the lease rental itself; not a lump sum. This means that changes in tariff rates can impact on aircraft already imported. There are certain exemptions for certain aircraft assets / parts and so the practical implementation of the tariffs needs to be monitored.

Practical Impact

In 1979 the World Trade Organisation supported the signing of the “Agreement on Trade in Civil Aircraft”. It was signed by over 30 countries and provided for duty-free trade of aircraft and parts. 2025 has undoubtedly brought with it a more complex landscape for international trade in the area. So what are the practical implications for lessors?

  1. Economic Impact – tariffs (on aircraft or even raw materials such as steel) increase the cost of aircraft production which impacts directly on the supply chain. This could ultimately impact on the profitability of airlines (the lessors’ customers).
  2. Increased uncertainty – as noted above regarding EU – US developments; this is fast moving and trade discussions are ongoing. While a “joint statement” on the US-EU July deal was released in August; we await more detailed commentary on the agreement. Even outside the regulatory landscape, the practical implementation of tariff policies by customs officials will need to be monitored carefully.
  3. Legal Impact – where tariffs do arise; who is liable? The lessor, the airline, the manufacturer? From a regulatory perspective this will depend on the jurisdiction and the specific transaction / background facts. However, the relevant legal documentation (purchase & sale agreements, lease agreements etc.) may also impact practically on who ultimately bears the costs. So vigilance will be important in this regard even more so than before.
  4. Documentation – in a more active tariff / customs environment, completing accurate and full documentation and ensuring good record keeping is critical. As noted above, there may be scenarios where new tariffs apply to existing leases. Certain exemptions may also depend on previous importation within a certain time-frame; reinforcing the importance of accurate and comprehensive documentation.