MRO industry encounters increased costs and delayed growth due to tariffs

Throughout 2024, the aviation industry experienced a gradual return to stability following the tumultuous impact of the COVID-19 pandemic. The resurgence in passenger demand to pre-pandemic levels and the financial gains made from streamlining operations during the crisis allowed airlines to consider reinvesting in upgrading and modernizing their fleets in response to the changing market conditions.

However, the introduction of global tariffs by the US Presidential Administration on April 2nd, 2025, under Donald J. Trump’s leadership, brought new uncertainties to the aviation industry and the Maintenance, Repair, and Overhaul (MRO) sector. The initial imposition of these tariffs created concerns about potential disruptions in supply chains and business operations. Thankfully, on April 9th, the administration decided to adjust these tariffs for the next 90 days, offering some relief to the aviation industry.

Despite this temporary relief, the aviation sector, including carriers and MRO companies worldwide, still face challenges due to tariffs on supply chains from Canada, Mexico, and Europe. Additionally, trade tensions between the US and China and the looming threat of an economic slowdown contribute to the prevailing atmosphere of uncertainty in the industry. As negotiations continue between stakeholders and pressure mounts for favorable agreements, the future growth and expansion of the MRO sector remain somewhat uncertain.

Diverse outcomes are possible, with specific corporate entities potentially receiving exemptions from the tariffs. This uncertainty prompts many in the industry to adopt a cautious approach, awaiting clearer signals about the market’s medium to long-term prospects.

As of the present situation, the US administration has enforced tariffs of up to 145 percent on trade with China, while the People’s Republic of China has reciprocated with 125 percent tariffs on US goods. Sectoral tariffs on crucial aviation materials from Canada and Mexico, like aluminum and steel, remain, impacting supply chains and creating downstream cost pressures on areas like manufacturing and MRO.

Amidst these challenges, airlines have developed strategies to minimize the impact of tariffs on their fleets. The extensive international nature of both fleet operations and supply chains, however, can still lead to operational disruptions if not managed effectively. With over 6,000 Boeing 737 aircraft active worldwide and hundreds of Airbus and Embraer planes in service across various regions, the implications of these tariffs are far-reaching.

The increased maintenance and input costs due to tariffs can present conflicting pressures on commercial carriers, especially those that have recently retired older aircraft or are considering fleet rejuvenation efforts. With potential delays and disruptions in new aircraft production, carriers may need to extend the service lives of existing aircraft, adding complexity to their operations and maintenance planning.

In terms of retrofits and cabin upgrades, airlines may need to exercise caution as costs rise, particularly in core regions where passenger demand is high. The post-pandemic period saw many airlines investing in passenger comfort enhancements to attract more customers, but with revenue uncertainties looming, carriers may need to reassess their retrofit plans to manage costs effectively.