Aerospace Firms Can Recover Section 301 Duties via Drawback
New forced-labour tariffs spare civil aircraft parts but hit other inputs, creating a recoverable liability for importers.
Effective July 24, 2026, the US Trade Representative imposed additional Section 301 duties of 10% to 12.5% on imports from roughly 60 economies, including the European Union, citing forced-labour enforcement failures. While this measure replaces expiring Section 122 tariffs and stacks on top of standard duties, the aerospace sector faces a bifurcated impact. A specific exemption shields civil aircraft, engines, and components from these new charges, protecting the core bill of materials for commercial aviation from this particular cost increase.
However, the exemption is narrow and does not cover the full range of inputs required by aerospace manufacturers. Items such as raw materials, chemicals, interior textiles, general hardware, and tooling fall outside the civil aircraft carve-out and remain subject to the new duties. According to Aerospace Global News analysis, companies must distinguish between exempt aircraft parts and non-exempt industrial inputs to accurately assess their financial exposure under the new trade regime.
Non-exempt inputs face additional tariff burdens
Aerospace enterprises import goods beyond aircraft components, including electronics not classified under aircraft headings, ground-support equipment, and MRO consumables. These items are vulnerable to the new forced-labour duties. Furthermore, the sector remains exposed to two other active Section 301 actions. The China technology-transfer lists impose tariffs of 25% on Lists 1, 2, and 3, and 7.5% on List 4A, affecting machined parts and electronics. A new action against Brazil, effective July 22, 2026, adds 25% duties to most goods from that country, impacting supply chains reliant on major Brazilian manufacturers.
Classification determines liability at the eight-digit tariff schedule level, meaning the purchasing division does not dictate duty applicability. Misclassification can lead to paying duties on exempt items or missing opportunities on recoverable costs. Companies sourcing from affected economies must audit their import portfolios to identify which inputs are subject to the 10% to 12.5% forced-labour duties versus those protected by the civil aircraft exemption.
Duty drawback recovers most tariff costs
Importers can mitigate these costs through duty drawback under 19 USC 1313. This mechanism allows claimants to recover up to 99% of duties, taxes, and fees paid on imported merchandise that is subsequently exported or used in the manufacture of an exported product. This recovery applies to all three active Section 301 actions: the new forced-labour tariffs, the China technology-transfer lists, and the Brazil measures. It transforms tariff exposure from a sunk cost into a recoverable liability for companies with export-oriented operations.
The drawback provision does not apply to all tariffs, specifically excluding the IEEPA fentanyl tariff. However, for the majority of aerospace supply chains affected by the Section 301 measures, the ability to reclaim nearly all paid duties provides a significant financial offset. Accurate classification and timely filing for drawback are essential to realizing these savings and maintaining margin stability in a high-tariff environment.
