Delta has bought three planes since the trade war began, but paid no tariffs. Here’s how

And yet, since tariffs went into effect in early April, the Atlanta-based airline has managed to accept delivery of three new tariff-free Airbus planes. They are scheduled to receive 31 more from the French manufacturer in 2025.

As the aerospace industry scrambles to try to secure tariff exemptions from the White House, how airlines like Delta navigate them in the meantime remains a multimillion-dollar question in a business with thin profit margins and very expensive planes.

As of now, Delta can still accept tariff-free delivery of narrow-body Airbus planes from the company’s Mobile, Alabama, site and its Canadian plant, thanks to trade protections between the U.S., Canada and Mexico. That’s where two of its new post-tariffs planes came from.

While Airbus’ CEO Guillaume Faury acknowledged to investors last month that its U.S. customers are “not very much willing to pay tariffs,” he was clear that tariffs on planes imported from Europe would be on those customers, not Airbus.

And so, what happens to European-made planes, like the first one Delta has accepted since tariffs — a wide-body A350 mostly used for international long-haul travel — remains an open question.

Delta accepted a plane on April 30 and flew it without passengers from Airbus’ Toulouse plant to Delta’s Tokyo-Narita maintenance facility, where it remains.

That Tokyo stop is “standard practice” for new wide-body planes receiving “routine prior-to-service maintenance,” a Delta spokesperson told the AJC.

Delta’s current Boeing wide-bodies are among the oldest in its fleet — and given its international growth strategy, crucial revenue generators.

How Delta plans to bring this plane into service after its maintenance stop in Tokyo remains unknown; the spokesperson declined to comment on what its in-service strategy would be for the new A350 and did not respond to a question about whether it had deferred any future scheduled Airbus deliveries.

But the situation has reminded many industry observers of the strategy the company leveraged during a separate trade dispute during the first Trump administration.

Credit: Jenni Girtman

Credit: Jenni Girtman

A past loophole

At the time, Bastian similarly vowed the company would not pay tariffs on Canadian and European aircraft caught up in the dispute. Delta continued to accept new Airbus planes, but leveraged a loophole to avoid paying millions in tariffs.

The loophole came down to an interpretation of what is a “new” aircraft. The U.S. International Trade Commission had defined a new plane as one “with no time in service.” So once an airplane gained hours of service via an international flight first, it was technically no longer “new.”

Airbus’ Faury confirmed to investors last month that as they did back then, Airbus is again looking “at opportunities to export to somewhere else than (the) U.S., especially for airlines who have international operations and we have that flexibility.”

Today, Delta is “complying with all applicable regulations related to new aircraft entering service,” the spokesperson said, and “continues to work very closely with Airbus” on new deliveries.

Whether a similar strategy for larger wide-body aircraft could last for years of this trade war is still unclear, said Richard Aboulafia, managing director at AeroDynamic Advisory, an aerospace consulting firm.

“But it hardly matters because most of what Delta is taking is narrow bodies,” he pointed out: smaller planes mostly used on domestic routes.

Of the rest of the Airbus planes Delta is expecting in 2025, two-thirds are narrow-body; some are produced in Canada and the U.S., and some are produced in Hamburg, Germany.

All new Airbus wide-bodies are made in France.

Tariff-free delivery of the narrow-body planes has been possible thus far thanks to moves by Airbus during the prior trade war: it acquired a stake in a Bombardier jet program in Canada and brought final assembly to Mobile.

But aircraft manufacturers have global supply chains with parts and materials from all over. Those components could still be subject to tariffs paid by Airbus, even if final assembly is in the U.S., Faury acknowledged.

Credit: HYOSUB SHIN / AJC

Credit: HYOSUB SHIN / AJC

‘There’s no way around it’

In the short term, when they cannot get around a tariff, it’s likely that carriers “will defer deliveries if they have to, to try to avoid paying those tariffs and push them out to maybe a time when those tariffs aren‘t an issue,” predicted Ronald Epstein, an aerospace industry analyst with Bank of America.

But in Washington, the industry has been “getting louder” to try to secure some tariff relief from the White House, he said. Their push was slower to come together than the auto industry’s, “but my understanding is they’re doing that now.”

Faury told investors he’s optimistic for some kind of exemption because under the current structure, “the first impacted part of the industry is the U.S. industry and that’s not very logical.”

And the industry has a very good argument to make, explained Aboulafia, because aerospace has been a major trade bright spot for U.S. manufacturing with an about $80 billion trade surplus.

A 1979 international agreement that eliminated tariffs on civil aircraft, engines and other aerospace products has been “one of the most important trade treaties in history,” he said.

It has determined “so much of the tremendous success the U.S. industry has enjoyed in this industry. It’s unbelievably successful.” The new tariffs, he said, violate that agreement which includes the U.S., Canada and the EU. The Aerospace Industries Association released a fresh white paper defending the treaty earlier this month.

Bastian reminded investors in April that the U.S. aerospace industry exports six times the amount to Europe that Europe imports to the U.S.

“That’s a really important fact to know, and I hope our leaders in Washington are paying attention to that,” he said.

Eventually though, if that argument cannot convince Washington to grant tariff relief, carriers like Delta will probably have to find a way to split the cost with manufacturers like Airbus, Epstein said.

“Somebody has to pay the tariff. There’s no way around it.”

But right now, “everybody’s hope is that this goes away.”