trade war
Trump’s tariffs are back in the news again. The US Supreme Court, in a February 20, 2026, decision, ruled 6-3 that President Trump’s sweeping emergency tariffs imposed under the International Emergency Economic Powers Act (IEEPA) are unconstitutional and illegal.
Chief Justice John Roberts’ Opinion: The power to impose tariffs is “very clearly a branch of the taxing power.” The Framers intentionally denied the executive any part of this authority, and the government conceded that the president has no inherent peacetime power to impose tariffs. The Court held that IEEPA does not authorize the President to impose tariffs. This invalidated Trump’s:
- “Liberation Day” reciprocal tariffs on nearly all trading partners (10-50%)
- China fentanyl tariffs (10%)
- Mexico fentanyl tariffs (25% on non-USMCA goods)
- Canada fentanyl tariffs (35% on non-USMCA goods)
Financial Impact
- $129-160 billion already collected through February 20
- $1.4 trillion would have been raised through 2035
- Businesses may be entitled to refunds for tariffs they’ve paid, which creates a host of unexpected complications.
Trump’s Immediate Response within Hours of the Ruling was to issue an Executive Order immediately revoking the IEEPA tariffs, but simultaneously imposed new tariffs using alternative legal authority:
Section 122 of the Trade Act of 1974:
- 10% global tariff on all countries, effective February 24, 2026
- Trump then announced he would raise it to 15% (the maximum allowed under Section 122)
- 150-day duration (until July 24, 2026) unless Congress approves extension
- Requires Congressional approval to continue beyond 150 days
- Trump’s Reaction: “I guess it has to get litigated for the next two years. So they write this terrible, defective decision, totally defective.”
At a White House press conference: “The Supreme Court’s ruling on tariffs is deeply disappointing, and I’m ashamed of certain members of the court, absolutely ashamed for not having the courage to do what’s right for our country.”
Our focus — Aerospace Exemptions – The Critical Detail
Under the New Section 122 Tariff, Aerospace is EXEMPTED. The Section 122 tariff will not apply to: (1) certain critical minerals; (2) metals used in currency and bullion; (3) energy and energy products; (4) certain natural resources and fertilizers; (5) certain agricultural products, including beef, tomatoes, and oranges; (6) pharmaceuticals and pharmaceutical ingredients; (7) certain electronics; (8) certain aerospace products; and (9) information materials, donations, and accompanied baggage.
This means that aircraft, engines, and aerospace components are exempt from the 15% global tariff. Civil aircraft and aircraft parts had also been exempted from IEEPA tariffs. Aerospace maintains exemption status under the new framework. There is also a brief “on the water” exception for goods in transit to the United States before 12:01 a.m. EST on February 24, 2026, and which enter the United States for consumption prior to February 28, 2026.
The Complication — Refunds
The court’s decision creates massive uncertainty. Companies that paid $129-160 billion in now-illegal IEEPA tariffs may be entitled to refunds, but Trump’s position is “I guess it has to get litigated for the next two years.” Our translation is: He won’t voluntarily refund, so companies have to sue.
Treasury Secretary Scott Bessent echoed the President: “Using these other authorities will result in virtually unchanged tariff revenue in 2026.” So it’s a Catch-22: companies might get refunds for old IEEPA tariffs (if they sue and win). But they immediately face NEW Section 122 tariffs, and the net effect is a potential double payment during litigation.
Further Aviation Industry Impact
Airlines:
- Potential refunds on jet fuel import tariffs paid under IEEPA
- But new Section 122 tariffs may apply (unless fuel is exempted)
- Overall uncertainty on the cost structure
Boeing & Airbus:
- Aircraft and parts are exempted from Section 122 tariffs
- This is a huge relief for US airlines buying foreign aircraft (especially American, Delta, and United)
- Maintains competitive neutrality between Boeing and Airbus
The Cuba Oil Blockade Twist: Trump used IEEPA tariffs to threaten countries supplying oil to Cuba (primarily Mexico and Venezuela). This triggered Cuba’s 30-day aviation fuel blackout (February 10 – March 11, 2026). With IEEPA tariffs struck down, the legal basis for threatening Mexico/Venezuela suppliers is weakened, though Trump could use other authorities. Plus the US Navy still has a significant presence in the region.
The Timeline
The 150-Day Clock means the Section 122 tariffs expire July 24, 2026, unless Congress approves continuation (unlikely with narrow Republican majorities), Trump uses yet another legal authority, or the tariffs simply end.
This creates uncertainty for airlines planning 2026-2027 budgets, OEMs negotiating contracts, and Lessors structuring deals. These are real management time consumers impacting this week. That uncertainty is going to play out for the traveling public in some form or another. The only winners at this stage are the legal profession. Timelines are their best friends.
Bottom Line for Aviation
Good News
- Aerospace products (aircraft, engines, parts) are exempt from the 15% Section 122 tariff
- This protects Boeing, Airbus, engine makers, and airlines from direct aircraft cost increases
- Potential refunds for improperly collected IEEPA tariffs
Bad News
- Massive legal uncertainty
- Refunds require years of litigation
- Section 122 expires in 150 days (what happens then?)
- Trump could use other authorities (e.g., Section 301).
- Cuba’s oil blockade legal basis weakened, but could be reimposed
Even with the exemptions, broader trade-war chaos creates economic uncertainty that ultimately affects demand for aircraft. And if there’s one thing the global commercial aviation industry does not need right now, it is more supply uncertainty.
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