GE Aerospace CEO Larry Culp joined other high-level aviation executives in advocating for a tariff-free status for the industry. He cited the 1979 Civil Aircraft Agreement in support of his stance when he recently met with President Trump. The zero-duty status to date has led to a $75 billion annual trade surplus for U.S. aerospace companies, Culp said in a Reuters interview.
Bet he is worried. My understanding is that GE does the sales, and half the R&D, while the other half of R&D and the actual manufacturing is in France…
A quick internet search showed that GE Aerospace seems to have had “supply chain” problems reported to Reuters for many years. Perhaps they need a new CEO that actually works to solve the issue?
Culp’s message is a solid heads-up. The Civil Aircraft Agreement (CAA) worked back in 1979, but it’s due for an update. That $500 million GE hit? It’s not just about GE, it signals deeper trouble inthe aerospace trade.
LEAP engines use parts from the U.S., France, Mexico, India, and China. This isn’t just about supply chain hiccups, the whole trade framework is outdated. When one part gets stuck, the cost and delays ripple through the whole system.
Just a few thoughts from someone trying to make sense of it all:
Update the CAA to include today’s major players, not just the 33 signatories from when it launched decades ago.
Lock in USMCA protections to keep North American aerospace flowing smoothly.
Make tariff exemptions permanent so the rules don’t swing with every administration.
Add guardrails to avoid sudden tariff shifts. This industry plans in years, not months, and definitely not days.
Well, some people just need a bit longer to understand what Trump’s plan is - convince other nations to lower their tariffs on our exports to the low levels we have historically placed on imports from others. Sure, best would be zero, and not only on aerospace products but on all products. Just as zero income tax on all forms of incomes is the best possible solution to high taxation of individuals and businesses. As far as GE Aerospace is concerned, I can assure others that the LEAPs are made in large numbers at multiple US facilities, especially at their large plant in Durham, NC. Both my sons have worked there building LEAPs and the other magnificent US turbines in that plant, where only a handful of French are present. Yes, they have had supply chain issues, but primarily due to poor quality from European suppliers, from what I understand. These issues pre-dated the China flu hiccups.
The theory behind tariffs is to raise the price of imports to make your manufactured products more marketable. A tariff can keep countries from dumping their products on another country that can’t produce the products as cheaply due to higher costs. Tariffs can lead to protectionism which can cause manufacturers to become reliant on government protection rather than market innovation to sell their products.