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Bombardier skips guidance due to tariff threat

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Trade groups warn of supply chain impact

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Aviation coalition urges government-industry cooperation

to

minimize supply chain disruptions

By Allison Lampert and Dan Catchpole

March 13 (Reuters) - Tariffs imposed by the U.S. and

other countries in retaliation have prompted some business jet

buyers to try to rush deliveries or add contract clauses to

protect themselves from the duties, as the aviation sector

braces for higher costs of planemaking materials, industry

experts said.

Canada and the European Union hit back on Wednesday with

retaliatory duties against the United States after the White

House introduced 25% tariffs on all imported steel and aluminum,

metals, which are used to make planes.

The U.S. may impose additional tariffs in April on Mexico

and Canada.

Makers of private or business jets, such as Canada's

Bombardier, General Dynamics' ( GD ) Gulfstream

Aerospace and Textron ( TXT ), have seen their order backlogs

grow on demand from wealthy travelers and corporate clients.

While commercial planemakers such as Boeing ( BA ) and

Airbus, and large aerospace suppliers, have not warned

of any major impact on aircraft production and deliveries,

tariffs that have pressured financial markets are creating

uncertainty for investors and buyers.

Bombardier did not provide guidance this year due to the

tariff threat, while some trade groups have flagged concerns

that a drawn-out trade war would hit a globally integrated

aerospace supply chain.

Amanda Applegate, a partner at Soar Aviation Law, said she

has seen some buyers of non-American private jets located

outside the country add clauses to protect themselves from

higher costs if their purchases get hit with tariffs.

Others are trying to close deals quickly, before further

tariffs hit. One European buyer of a U.S. private jet has been

trying to rush a transaction, said Katie DeLuca, a partner at

Florida-based law firm Harper Meyer.

"That is what I've been seeing in that area, that rush

transaction, get it exported, get it into Europe before a

potential issue will arise," DeLuca told a Tuesday webinar held

by the National Business Aviation Association.

DeLuca added she has also seen a transaction in which a U.S.

buyer tried to terminate a deal with a non-U.S. seller for a

used Canadian aircraft based abroad.

A Bombardier spokesperson said its parts are distributed

from Chicago and its planes can be delivered to customers in the

U.S. without incurring tariffs in the world's largest market for

private planes, as the company is compliant with the

U.S.-Mexico-Canada trade deal.

A U.S. tariff exemption on USMCA-compliant goods from Mexico

and Canada is set to end in April.

PARTS COSTS

The Aerospace Industries Association and a coalition

including U.S. airlines and business jet manufacturers have

raised alarm over tariffs hitting the industry's supply chain,

which produces critical parts.

"It is essential that both government and industry work

together to minimize cost and availability disruptions in the

aviation supply chain, which in many cases cannot be easily or

quickly addressed," the coalition said.

Airbus CEO Guillaume Faury told a French TV program on

Tuesday he is starting to see disruption in the European

planemaker's supply chain, without offering details.

However, five U.S. commercial aerospace suppliers told

Reuters they have not seen any or significant price increases

due to tariffs, or the threat of tariffs. Two said they order

materials as much as six to 12 months ahead of time, and have

seen no noticeable price fluctuation on aluminum or steel.

One supplier said his Seattle-area company is not changing

its business plans for now, because it does not expect the

tariffs to last.

Aengus Kelly, CEO of the world's largest aircraft leasing

company AerCap ( AER ), warned on Wednesday on CNBC that the

price of a Boeing 787 plane could increase by $40 million in a

worst-case scenario due to the tariffs. Boeing ( BA ) had no immediate

comment.