Trade Stall: New Tariffs Shake the U.S. Aviation Industry

‍DALLAS  — President Donald Trump’s sweeping new tariffs, enacted by executive order on April 2, 2025—dubbed “Liberation Day” by the administration—have jolted the global trade system and sent shockwaves through the U.S. aviation industry.

A report by Cassel Salpeter & Co. outlines the impact the tariffs have had on the cargo sector.

Trump’s policies mark a dramatic pivot from decades of free-trade principles that helped the United States become the world’s largest economy. While the administration frames the move as “reciprocal” trade justice, industry leaders warn that the rapid shift risks fueling inflation, slowing growth, and eroding consumer confidence.

Overall air cargo volumes to the U.S. have declined approximately 25% year-over-year. However, the volume between the US and China, the country’s second-largest trading partner (after Mexico), has dropped 60% since the tariffs. ​

It is worth noting that the tariffs come just as the U.S. aviation sector was set to surpass US$1 trillion in revenue for the first time. And the International Air Transport Association (IATA) has now downgraded its 2025 air cargo demand growth forecast from 5.8% to near-zero. ​

Air Cargo Faces Major Headwinds

Airlines moving goods between continents must now navigate a disrupted network as manufacturers and retailers reconfigure supply chains to bypass higher costs.

The report notes how the end of tariff exemptions established under the 1980 Agreement on Trade in Civil Aircraft—a pact that eliminated duties on aircraft, engines, and parts—is raising alarm. Higher production costs for aircraft manufacturers and more expensive procurement for airlines could ripple through the sector, slowing fleet expansion and freighter conversions.

Even the logistics of E-commerce are already facing major changes. The elimination of the $800 “de minimis” exception for low-value imports, combined with new tariffs, has played a large part in slashing the volume of small parcels flown directly from China to U.S. consumers.

Major players in e-commerce such as Alibaba, Shein, and Temu are shifting to bulk ocean freight to U.S. warehouses, abandoning a model that previously drove air cargo growth.

Shifting Routes, Rethinking Strategy

Cargo airlines are finding ways to alleviate the tariff pain by reallocating aircraft away from China-U.S. lanes toward European and other regional routes. Network planners are exploring hybrid models that combine air freight with pre-stocked warehouses closer to end customers, as well as partnerships with countries where negotiated tariff reductions could open new corridors.

The report shows that some carriers are betting on operational offsets. Lower fuel prices could help absorb higher import costs. However, rising fuel prices allow for surcharges that can be leveraged for additional revenue. Others are experimenting with combining air and ocean shipments under a single customs entry to reduce per-shipment processing fees.

Outlook: Rough Air, Possible Recovery

The air freight sector’s resilience may hinge on how quickly new trade deals or exemptions can be struck. If tariffs are eased, the downturn could reverse soon, with aviation companies benefiting from efficiency gains and stabilized fuel costs.

Until then, turbulence is likely. “We were looking at a record year,” said one industry executive. “Now it’s about survival and adaptation.”