US airlines grapple with ‘unfair tax’ that adds to aircraft supply disruption

US airlines are scrambling to digest a new 10% tariff on Europeanmade Airbus planes that threaten additional havoc in a market already reeling from frozen deliveries of Boeing Co’s 737 MAX.

In a statement late on Thursday, Delta Air Lines called the proposed levy on aircraft from Europe that are already under contract for purchase “an unfair tax on U.S. consumers and companies.”

The tariff on Airbus planes creates uncertainty for aircraft delivery terms much like the global grounding of Boeing’s 737 MAX in March after two fatal crashes and comes at a time of threats to international air travel demand in the midst of slowing global economic growth and trade disputes.

No. 2 US carrier Delta is not a 737 MAX customer but with some 266 Airbus orders is the most exposed to aircraft levies due to take effect on 18 October after the World Trade Organization gave Washington the right to impose tariffs on $7.5 billion worth of EU goods annually in a long-running case.

Although the overall value of trade hit by sanctions was in line with expectations reported by Reuters, percentage tariffs were less than expected with Airbus planes initially subject to a tenth of the 100% rival Boeing had recommended.

Market sources said this was enough to disrupt trade in the cut-throat plane business but low enough to tempt some airlines to negotiate for Airbus to absorb some of the cost, squeezing its margins.

“10% is a deal breaker for airlines,” an industry source said, noting that planes liable to the tariff may have to be delayed. Planemakers are typically reluctant to absorb such costs, the source added.

Airbus declined to comment on commercial negotiations.

On a positive note aircraft parts were spared from tariffs, which means independent repair shops, some feeling pain from the grounding of the Boeing 737 MAX, will continue to function.

That will benefit Boeing and Airbus fleets equally, industry sources said. WASHINGTON: US trade officials said on Friday they were eliminating the exemption for bifacial solar panels from the Trump administration’s tariffs on overseas-made solar products.

The office of the US Trade Representative said in an online statement it was withdrawing the exclusion for imported bifacial solar panels, a new technology through which power is produced on both sides of a cell.

The US Trade Representative had announced the exemption in June. Under tariffs imposed in early 2018, the rate for solar panels had been set at 30% and then lowered to 25%.