Exclusive-Aircraft leasing giant calls on Trump to expand zero-tariff plane pact

AerCap CEO Aengus Kelly is urging President Trump to renegotiate and expand the 1979 Agreement on Trade in Civil Aircraft to include countries like China and India, aiming for a level playing field in the aviation industry amid ongoing trade tensions. Kelly argues that a "Trump trade accord" would benefit U.S. high-tech manufacturing and engineering jobs, as the current agreement excludes major players and the U.S. risks ceding aerospace manufacturing in a prolonged trade war; however, analysts note that Trump's preference for bilateral deals could complicate a broader renegotiation.

Analysis

Aengus Kelly, CEO of AerCap (AER), the world's largest aircraft leasing company, is advocating for the Trump administration to renegotiate and expand the 1979 Agreement on Trade in Civil Aircraft to include major aerospace nations like China and India, which are currently not full members. This proposal, framed as a potential "Trump trade accord," aims to establish a level playing field and is presented as an opportunity to bolster U.S. high-tech manufacturing and engineering jobs, representing a strategic shift from the industry's previous lobbying efforts focused on merely restoring the existing tariff-free regime amidst ongoing trade disputes. The current 1979 pact, which eliminated tariffs on aircraft and parts among its 33 signatories, supports a substantial $75 billion trade surplus for the U.S. aerospace sector, benefiting major manufacturers such as GE Aerospace (GE) and RTX (RTX). Despite the potential benefits, analysts caution that renegotiation faces significant hurdles, including the administration's preference for bilateral agreements and the intricate web of existing global trade tensions. The urgency is heightened by recent disruptions, such as the effective halt of Boeing (BA) deliveries to China due to retaliatory tariffs and the development of China's C919 as a direct competitor, leading Kelly to warn that a prolonged trade war could gradually shift aerospace manufacturing dominance towards Airbus.

Key Decisions for Investors

• Investors should closely monitor developments in U.S. trade policy concerning the aerospace sector, as any renegotiation of the 1979 aircraft trade agreement could significantly impact global supply chains and the competitive positioning of manufacturers, particularly Boeing (BA), which currently reflects a negative sentiment due to trade uncertainties.
• Consideration should be given to the potential long-term strategic benefits for lessors like AerCap (AER), which shows positive sentiment for its proactive stance, if a more inclusive global trade pact materializes, versus continued risks for manufacturers heavily exposed to tariff-sensitive markets.
• Diversification across the aerospace sector may be prudent to mitigate risks associated with specific national trade policies and to capitalize on opportunities arising from shifts in the global manufacturing landscape, including the emergence of new aerospace players and the varying impacts on component suppliers like GE Aerospace (GE) and RTX (RTX).