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US aero group open to discussing tariffs to protect

national

security and key industry

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Industry worried about impact of tariffs on US jobs

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Trump said he could hit Canada, Mexico with 25% tariffs

(Adds context and background on tariffs and aerospace industry,

paragraphs 7-12)

By Allison Lampert

Jan 17 (Reuters) - The largest U.S. aerospace trade

group opened the door on Friday to discussions on specific

tariffs, after President-elect Donald Trump suggested slapping

duties on countries including Mexico and Canada.

Aerospace Industries Association, which represents U.S.

planemaking and defense companies such as Boeing ( BA ) and

General Dynamics ( GD ), addressed the prospect of tariffs for

the first time, saying in a statement it would discuss how to

tailor them to protect national security and key industries.

The statement did not give specifics.

"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 U.S. national security needs and maintains our

position as a leading high-technology, U.S.-centered

manufacturing sector," the statement said.

Trump's warning in November about potential 25% tariffs on

imports from Mexico and Canada has triggered threats of

retaliation from Ottawa and raised concerns among the automotive

and other sectors that the move could also hit U.S. industry.

In 2023, Canada was the top import country and third-largest

export destination for aerospace and defense trade with the

United States, according to AIA. Mexico was not among the top

five.

Earlier this week, the CEO of AerCap ( AER ), the world's

largest aircraft-leasing company, warned the tariffs could hit

already fragile aerospace supply chains and hinder Boeing's ( BA )

efforts to restore much-needed cash. Boeing ( BA ) declined comment on

the prospect of tariffs.

Some defense and commercial aerospace executives had been

banking on their supply chains receiving waivers for imported

components if tariffs are imposed, sources told Reuters,

although it is not clear how the Trump administration would act.

In June 2021, the United States and European Union agreed on

a five-year truce over a nearly 17-year conflict on aircraft

subsidies that had led to billions of dollars in transatlantic

tariffs on European and U.S. industries.

A separate side agreement of more than 30 countries limits

trade sanctions on aircraft parts. However, the U.S. levies

duties on some materials such as titanium sponge that are key to

building planes.

AIA stressed the importance of trade fueling "economic

growth and innovation in American aerospace and defense," adding

that "over a 40-year period, the industry experienced over 2,000

percent growth in exports."

In November, Trump said on social media that immediately

after his Jan. 20 inauguration, he would sign "all necessary

documents" to begin charging Mexico and Canada 25% tariffs

unless those countries clamp down on illegal immigration and

fentanyl trafficking.