Tariff wars

opinion

by Alasdair Whyte

April 11, 2025

Tariff wars today should be viewed in the context of past conflicts.

It is important to put trade wars into perspective. In 1839 the British fought a bloody war with China about tariffs. The British East India Company was annoyed that the Chinese government was using them to cut (illegal) opium imports. This was deemed so outrageous that the British Royal Navy was sent to negotiate.

At the time of writing, things are nowhere near as bad as this. But the US has now imposed a 145% tariff on Chinese products. In return, China has imposed 125% duties.

This is not good for anyone selling new or pre-owned US-built aircraft into China. (This was covered on our Emergency Tariff Town Hall recently). We have already heard of pre-owned deals to China falling through, although the brokers involved say that they were not 100% certain anyway.

“It is far too early to call it and certainly not the time to press the panic button,” says David Dixon, president, Jetcraft Asia in Hong Kong. “We may see buyers sitting on their hands for a bit but there are also a lot of deals that are not impacted by tariffs, particularly deals in the region.”

No one wants to lose access to the second largest economy in the world, but China is not the second largest business jet market. It was extremely important to OEMs after the global financial crisis when demand in the US had fallen. “Thank God for China” said the CEO of one OEM in 2012. But President Xi Jinping’s common prosperity policy in 2021 cooled the market. Since Covid, the country had been a net exporter of business jets.

“I have definitely had Chinese customers who were – for the first time in years – starting to sniff around new orders in past couple of months,” said one lawyer in Asia last week. “I’ve specifically had those customers change from being interested in US aircraft in the last week.”

Obviously, the bigger concern is a global economic downturn. Blackstone, JPMorgan and others have all said that the US is in danger of entering a recession. “This industry is a very good barometer of how confident ultra-high net worth individuals are. If things are going up, they are confident and when things go back down it is a good sign that a downturn is coming. It is usually ahead of the markets,” says Dixon.

But there is nothing we can do to stop that. Dealers also believe that there are still opportunities to buy aircraft. “Last year was a tough one for inventory deals, but it looks like there are going to be a lot of opportunities this year,” says Steve Main who joined Aero Ventures as senior vice president this week. He is looking for aircraft now. “One of our key differentiators is that we have capital ready and we can deploy it very quickly,” says Main. “We can execute on transactions in 24 to 48 hours.” This could be useful for distressed sellers.

By the time you have got this far, the tariffs may have changed again. We could see a China/US trade agreement soon.

To prove that it is not always a fair world, the British ended the first Opium War in 1842 with favourable tariffs. They also got Hong Kong for more than a century.