Bloomberg has a story about how Delta has been avoiding US tariffs on new Airbus planes for the past year, and I certainly can’t blame the airline…
In this post:
Basics of US tariffs on Airbus jets
In October 2019, President Trump introduced new tariffs on many European goods, including new Airbus jets. As Trump likes to say, trade wars are good, and are easy to win.
When this was first introduced, the tariff on Airbus jets produced in Europe was 10%, but that was quickly increased to 15%, which is obviously a huge amount when we’re talking about jets that retail for well over $100 million each.
Now, it’s worth noting that Airbus in the meantime produces some planes in the US and Canada (including the A220 and some A320-family aircraft), and those aren’t subjected to these specific tariffs.
These tariffs only apply on new Airbus jets. How is the Trump administration defining new jets?
- New Airbus jets are ones that have “no time in service or hours in flight other than for production testing,” or for delivery to the US
- In other words, if a new plane operates a flight to a destination outside the EU other than the US, it would no longer be considered a new jet, and therefore potentially wouldn’t be subjected to those tariffs
You’ll never guess what Delta did… 😉
The US imposed tariffs on Europe-built Airbus jets
How Delta outsmarted the US Airbus tariffs
Since Trump’s new tariffs took effect in October 2019, Delta has taken delivery of seven new Airbus jets manufactured in Europe, including:
- Four Airbus A330-900neos
- Two Airbus A350-900s
- One Airbus A321
The airline has paid tariffs on zero of those planes. How is this possible? Well, Delta has elected not to import these jets. As a Delta spokesperson explains:
“We have made the decision not to import any new aircraft from Europe while these tariffs are in effect. Instead, we have opted to use the new aircraft exclusively for international service, which does not require importation.”
Delta has taken delivery of an A321 since tariffs were introduced
How does this work in practice?
Delta’s approach here seems to be twofold:
- The airline flew these jets somewhere outside of the EU before flying them to the US, and therefore they’re not considered new
- The airline is exclusively using these planes for international flights, and therefore these planes don’t have to be imported
How does that work? Let’s take a look at one of each of the three jet types:
- In September 2020, Delta took delivery of an A350-900 with the registration code N515DN; the plane flew from Toulouse to Amsterdam, several weeks later it flew from Amsterdam to Tokyo, and then a couple of weeks later it flew from Tokyo to Atlanta
- In February 2020, Delta took delivery of an A330-900neo with the registration code N405DX; the plane flew from Toulouse to Tokyo, and then a few weeks later it flew from Tokyo to Seattle
- In February 2020, Delta took delivery of an A321 with the registration code N389DN; the plane flew from Hamburg to Keflavik to Montreal to San Salvador, then it was parked in Mexico for months during the pandemic, and then a few months ago it finally entered service
Again, Delta is using these jets exclusively for international flights to & from the US, and isn’t operating them on any domestic flights. That’s easy enough for the A330-900neos and A350-900s, but what about the A321? Delta has been flying its A321 exclusively in two markets:
- Initially the plane exclusively operated flights between Detroit to Toronto for several weeks
- Now the plane is exclusively flying between Atlanta and Montego Bay
Presumably Delta is hoping that these tariffs go away when President-Elect Biden takes office in January, and at that point it can register them as it otherwise would without having to pay tens of millions of dollars.
Delta has avoided tariffs on two new A350-900s
Bottom line
Delta has been the most creative airline when it comes to avoiding tariffs on Airbus aircraft manufactured in Europe. The airline has avoiding “importing” these planes to the US by first flying them to a non-US destination outside the EU, and then using them solely for international flights.
There is a certain irony to Delta skirting tariffs while getting billions of dollars from the US government, but then again, these tariffs seem rather poorly thought out to begin with, so…
I find this story interesting because I had noticed Delta was flying some newly delivered planes to Tokyo first and was curious why, but I didn’t realize tariffs were the reason. Now we know.
I don't understand how DL flying from AMS to TYO would work. DL doesn't have an AMS-TYO route, KLM does. Did DL create a code share for this very purpose? Secondly, this reminds me of the days when people would go to Germany to buy their new Mercedes in Germany, drive it around Europe for 30 days, then import it to the US as a used car to avoid taxes.
Right, but planes are a special case - unless Delta has a LOT of 5th freedom flights that I don't know about, most "international" flights are going to have an endpoint in the continental US. Boom - imported.
@Sean C you can register a Vessel or aircraft on a US registry without its physical presence in the customs zone. Remember not even all US territories are in the US customs zone eg. USVI
To try to drag these comments back to planet earth: I'm surprised the "only international flights" dodge works. Importing happens when you cross a border, not if you are intending to go back (well, ok, carnets aside). And these planes are *US flagged* with N- registration codes. How can they say with a straight face that the planes aren't "imported"?
So ironic. Trump used to boast that he avoided taxes by being "smart." Yet he and his administration weren't smart enough to come up with simple legal language that would have avoided this loophole.
Pretty typical of just about everything Trump does. It's all for show; the actual execution is slipshod because it's not the point and his base doesn't bother itself with verification.
@Florida Sunshine
You made this political by opening the comments section with vitriol accusing Ben of pushing political views. In your mind, is it political to report on how Delta is dodging tarrifs? Or is it political because Ben said "Trump administration" (which is factually correct) instead of "current administration"? Or is it because of the dry humor from the Trump quote "Trade wars are good and easy to win", which you can find...
@Florida Sunshine
You made this political by opening the comments section with vitriol accusing Ben of pushing political views. In your mind, is it political to report on how Delta is dodging tarrifs? Or is it political because Ben said "Trump administration" (which is factually correct) instead of "current administration"? Or is it because of the dry humor from the Trump quote "Trade wars are good and easy to win", which you can find still up on his twitter here?
https://twitter.com/realDonaldTrump/status/969525362580484098
Make no mistake, Ben has made political posts on this blog when politics intersect with points and travel, and that's his right, but this one aint it chief.
It is also worth noting that the US also recently lost the WTO case against Boeing, giving the EU the right to impose retaliatory US made Boeing planes. This was always the expected and inevitable outcome to the case and why the initial US tariffs were nothing but a PR exercise that harms US importers/buyers. If Delta had paid those tariffs and imported the planes, that cost would have to be passed along to the...
It is also worth noting that the US also recently lost the WTO case against Boeing, giving the EU the right to impose retaliatory US made Boeing planes. This was always the expected and inevitable outcome to the case and why the initial US tariffs were nothing but a PR exercise that harms US importers/buyers. If Delta had paid those tariffs and imported the planes, that cost would have to be passed along to the US flying public one way or the other, so kudos to them for reading and understanding rules that were written unusually poorly in order to accomplish that PR goal. These tit-for-tat tariffs (and threats thereof) have been going on for decades. Taxing each other to death because neither the US nor the EU chooses to respect the rules is an exercise in futility. Tariffs are paid by buyers, not sellers and are a drain on economic growth and efficiency.
@Florida Sunshine: Well said.
A few of the comments above are valid. Freedom of speech is paramount and what our founding fathers in the United States risked their lives, yet alone all military personnel since. Anybody can attack me. I never brought up race or an affiliation on gender. You are correct, it is Ben’s blog and he has the right to publish whatever he chooses. Although, my point was let’s get back to points and miles vs. politics....
A few of the comments above are valid. Freedom of speech is paramount and what our founding fathers in the United States risked their lives, yet alone all military personnel since. Anybody can attack me. I never brought up race or an affiliation on gender. You are correct, it is Ben’s blog and he has the right to publish whatever he chooses. Although, my point was let’s get back to points and miles vs. politics. And all people that are rushing to judgement on me, I’m bi-racial and voted for Biden. How dare you call me names you did above. Assumption on my vote. You do not know me and I’m happy you can hide behind a blog because I doubt you all would say it too my face. FYI even though I didn’t vote for him, there is an overwhelming reason that Trump won Florida and had great support on minorities. Free speech is a blessing, but not in hatred as some of you attacked me. Your the racist and ignorant close minded bottom of barrel people comparing me to kkk. And I’m happy to go sit in my penthouse and on my mega yacht. God bless USA and hard work opportunity. Peace out.
Great work Ben.
Can we just fast forward to Jan 21st.
There is nothing else to compare a fractured country to the rest of the world, than reading an American based TRAVEL BLOG that morphs into political misgivings and rants.
Made in the U.S.A.
Putin is laughing his ass off right now.
Just read through this comment section and you perfectly understand why TPG disabled comments altogether. Too much h@te from both sides of the political extremes.
Unfortunately, we have slightly over 73 million demonstrated "rock scientists" (as in, dumb as a bag of) right here in the U.S., including a slight majority of Floridians.
I'm watching from afar and as one political analyst has stated - the anti-Trump vitriol from the left has gone ballistic to the point where families are breaking up in discord because a family member actually supports the Republican party. Recently reported a 21 year old has told his mother he will never speak to her again because she voted Republican. Also noted is the fact that as it becomes clear that the Democrats will...
I'm watching from afar and as one political analyst has stated - the anti-Trump vitriol from the left has gone ballistic to the point where families are breaking up in discord because a family member actually supports the Republican party. Recently reported a 21 year old has told his mother he will never speak to her again because she voted Republican. Also noted is the fact that as it becomes clear that the Democrats will probably take office there have been no riots or unrest in the streets. Compare that to the leftist riots when Trump was elected. Hmmm.
Then lets talk about tariffs under the Biden administration. Some of you seem to think that Biden is anti-duties? Ha. His plan is to completely cut off Canada, who used to be considered a friend and ally, from any possible participation in supply chain activities for Government Departments in the US. He also plans to shut down the Keystone but at the same time shut down shale oil. So where will America get its oil when it can no longer supply from within> From Russia? Iran? Saudi Arabia? Venezuela? But NOT from those Canadian Bastards begorrah. (Even though Canada has the "cleanest" oil produced on the planet). The losers will be both the Canadian suppliers of goods, services and energy and the American People who will support foreign dictators, China and all the rest.
So if you think Biden is good times I think you have not actually read his promises to destroy Canada.
Remember when Republicans supported free trade?
This article has zero to do with Ben’s political opinions. He is talking about tariffs (taxes) that have been put on Airbus & many Chinese companies. The problem with tariffs is that there is always a way around them for the corporation that is being targeted. Almost always the consumers or the tax payers end up paying the tariffs. I wish the so called “silent majority” would go back to being silent!
correction
there are counter-tariffs in place on Boeing aircraft entering the EU
It will be real interesting to see if EU airlines are able to find a similar solution given that there are no counter-tariffs in place on Boeing aircraft entering the EU, which happens to coincide with the expected return of the 737MAX to service, allowing Boeing to potentially deliver scores of airplanes to EU airlines (like way more than a handful of Airbus aircraft to Delta) .
The A320 family can be produced in the...
It will be real interesting to see if EU airlines are able to find a similar solution given that there are no counter-tariffs in place on Boeing aircraft entering the EU, which happens to coincide with the expected return of the 737MAX to service, allowing Boeing to potentially deliver scores of airplanes to EU airlines (like way more than a handful of Airbus aircraft to Delta) .
The A320 family can be produced in the US for US airlines. A330 and A350s don't generally fly domestic US routes and these specific aircraft won't.
It will be much harder for EU airlines to avoid operating 737MAXs within Europe.
I love the political vitriol but don’t read if you don’t agree. Or don’t agree and politely push back. Shocking how trumpers stick to half truths and alternate realities to make their own cases.
Some of the poor grammar makes me think that people like Florida Sunshine are actually Russians trying to sow discontent.
I’m fairly apolitical but Trump’s tarrifs have been a nigh universal bad thing for American consumers and businesses.
...I love the political vitriol but don’t read if you don’t agree. Or don’t agree and politely push back. Shocking how trumpers stick to half truths and alternate realities to make their own cases.
Some of the poor grammar makes me think that people like Florida Sunshine are actually Russians trying to sow discontent.
I’m fairly apolitical but Trump’s tarrifs have been a nigh universal bad thing for American consumers and businesses.
Won’t be sad to see the orange man go. Good luck to VP Biden getting anything done like raising taxes without a friendly senate. I’d not expect anything but partisan warfare and more right wing and far left wing clashes more than the wave of socialism and high taxes the right is claiming...
The right needs to stop being salty. Just wait and see what happens rather than the end is nigh-ing. You made fun of liberals for their loss in 2016. Grow a pair and keep an open mind.
In 4 years Trump will be back and get things back to normal. But if not u can call us Commie's and take in a Sec 8 person or lose ur home.
Been to Venezuela 25 years ago look on people like AOC helped the place .
That bastian (pun intended) of American job protection against the wicked ME3, skirting U.S. tariffs to be able to buy Euro manufactured aircraft. Got to love the double hypocrisy.
As an aside, N389DN did its first revenue flight from GCM to ATL (after ferrying from SAL to GCM)...pretty cool!
@Tony
+1 for recognizing sarcasm
While I agree tariffs are counterproductive, I don't understand why the uproar. People has been demanding for higher tax, or "fair share". Tariffs are effectively tax, and tax is paid by 'us" If you think tariffs hurt the consumers because they pass the tariffs to consumer, corporation does the same when govt raises corporate tax.
Hopefully new administration will remove these tariffs.
Breaking out the popcorn here in Australia. I love American banter.
Hopefully Biden will quickly end all Trump’s ridiculous tariffs not just the aircraft but European wine and other goods from China. Totally counterproductive hurting mostly consumers and businesses in the US.
Also, the tariff is likely to end regardless of who became president. The WTO backed EUs claim of unfair loans to Boeing, so they will be allowed to levy tariffs as well. So in theory, there will be an agreement from both sides to drop the tariffs... hopefully.
Ha, so the European Delivery model for airplanes. Most higher-end European Automakers offer this. Audi, Mercedes, and Porsche all allow you to take delivery of your car in Europe, drive it around for a week or so, then drop it off at a designated port. They save on the import duty and give some of that savings back to the customer.
Why does this have to be political?
The government makes the rules, and businesses employ accountants, lawyers and consultants to navigate the rules as efficiently as possible. Always have; always will.
Really no news here...
@neil
You are absolutely right. Just like Mexico is paying for the wall.
@neil
LOL that's the opposite of how it works unless that was /s. Tariffs increase the cost for those who are importing goods from another country, in an attempt to discourage importing. So when Trump imposed tariffs on China or on the EU, it increased the costs for Americans who wanted to import those goods back to the US.
@Florida Sunshine
You do realize that these tariffs have the same effect as a tax raise on the bottom line for most Americans right? Even if Delta paid the tariffs, they just would have passed those costs onto consumers (the vast majority of whom are Americans). It's the same with the nonsense tariff battle Trump has waged with China. Once again Americans have lost that battle in the form of higher costs of imported goods...
@Florida Sunshine
You do realize that these tariffs have the same effect as a tax raise on the bottom line for most Americans right? Even if Delta paid the tariffs, they just would have passed those costs onto consumers (the vast majority of whom are Americans). It's the same with the nonsense tariff battle Trump has waged with China. Once again Americans have lost that battle in the form of higher costs of imported goods from China and having to use massive amounts of taxpayer money to bailout farmers when China stopped importing soybeans and other crops, decimating farmers across the nation.
At least with President Biden, your taxes will only go up if you make over $400k, unlike these disastrous tariffs which have increased costs on goods for everyone and destroyed the financial prospects of farmers and people in other industries.
I don't know why Delta went to all this trouble. Trump claims that the country (eg China) from which you import ends up paying the tariffs, not someone in the US.
You might be able to make an argument for the use of tariffs (which rarely work, for reasons that are becoming quite clear). That said, like with everything else from this administration, they were implemented so incompetently as to have virtually no meaningful impact. All you've really done is increase the bureaucracy.
Face it - this isn't a left/right argument. This is a basic competence/couldn't find its own ass with both hands argument. If...
You might be able to make an argument for the use of tariffs (which rarely work, for reasons that are becoming quite clear). That said, like with everything else from this administration, they were implemented so incompetently as to have virtually no meaningful impact. All you've really done is increase the bureaucracy.
Face it - this isn't a left/right argument. This is a basic competence/couldn't find its own ass with both hands argument. If right wingers want to hang their weight on this garbage, that's certainly an interesting choice.
@Sam
Oh bless your heart. There aren't enough crayons in the world.
And to think people complaining about people trying to lower their tax by optimization, yet they cheer what Delta did.
It only goes to show, its all political, not a sense of what is right or wrong.
Getting back to the focus of the article...
Like any good company, Delta doesn’t make the rules. They just use them to their advantage. Good for Delta for finding a solution that works for them.
Well...that spiraled out of control rather quickly
@Florida Sunshine- Serious question. At what point do you people craw back into the hole that you came out of? The rest of us are patiently waiting for the Trumptards to go back into hiding so the adults can have conversations based in reality.
So you are impressed with Delta's tax dodging? Same with Amazon and Apple? Funny how leftist led companies that advocate for higher taxes never seem to pay them.
Oh, and meanwhile, the EU imposed tariffs on Boeing as well, so it's not all orange man bad. Airbus was benefiting from direct subsidy payments from the governments, Boeing meanwhile had the audacity to follow the washington state tax code.
@DCAFlyer: I hate to bring up a fact, but it was Joe Biden not Trump that gave an eulogy for Sen Robert Byrd who was a KKK leader.
@CHRIS: I hate to bring up another fact, but Trump simply followed the tax laws that Joe Biden wrote during his 47 years in Washington.
@DCAFlyer
Might want to check history on that KKK hood, seen plenty of minorities wearing the MAGA hat but not the hood so much
The tax rules are what they are. If a tax doesn't apply to imports of used aeroplanes, and a purchaser can ensure that their aeroplanes are 'used' before they are imported, they are complying with the law. That's not rock science. As a conservative newspaper proprietor in Australia said when appearing before a parliamentary committee, if you pay more tax than you are required to, you have rocks in your head. From what the article...
The tax rules are what they are. If a tax doesn't apply to imports of used aeroplanes, and a purchaser can ensure that their aeroplanes are 'used' before they are imported, they are complying with the law. That's not rock science. As a conservative newspaper proprietor in Australia said when appearing before a parliamentary committee, if you pay more tax than you are required to, you have rocks in your head. From what the article says, by continuing to use the aircraft on international routes, Delta was doing more than it needed to.
I don't know whether the EU imposed tariffs on Boeing aircraft imported from the US, but if they did and there were similar loopholes, no doubt European carriers would have used them. If the EU tariffs were designed to prevent that they would have paid them or bought Airbus aircraft instead.
This is no different then the guy scamming free bags from Spirit. Delta is just scamming the US government by changing its planes status from "new" to "used"
Change my mind.
See here, more A350s received via revenue flight from AMS
https://twitter.com/dalscope/status/1306320338368823296
@Matt
If you like your doctor you can keep your doctor LOL
@Ben(Lucky)
I don't care if you're as far left as AOC, will probably never agree with you on politics but keep up the great work on travel, love this site!
P.S. Are their tariffs on Boeing metal in Europe for European carriers?
@Florida Sunshine, "you're" clearly not a "rock scientist" yourself.
@Florida Sunshine:
It's Ben's blog. He can post what he likes in whatever tone he likes. As you and your ilk are so fond of saying: If you don't like it, then leave. Trust me when I tell you know will care. Not about you, not about your opinions, not about your departure. Shut up and put up...and take your KKK hood...err, MAGA hat with you.
Wait, wouldn’t the operation of the Tokyo-Detroit flight mean that the plane is no longer “new”, meaning they should be able to import it no probs?
Once President-Elect Biden gets in and the " Green New Deal " is pushed through and the impact it will have on the airline business Delta will wish they could go back to the days of paying those tariffs. :)
@Florida Sunshine
1) His taxes won't be raised unless he makes more than $400K annually
2) Please stop the snowflakery and accept the fact that you lost. President-elect Biden will take office at 12:00 PM on January 20, 2021. Deal.
"But Trump only paid $750 in taxes" Pot, meet kettle.
It is obvious your such a Democrat. I prefer to not read your posts again since you have been putting your own political views in many articles. It doesn’t take a rock scientist to see it. Enjoy your taxes being raised. Get back to what your blog is about and please leave your political views out of it. Hypocrisy.