Authored by Simon Spells, Julia Norsetter and Janet Salim.

The rise of e-commerce and limited capacity for conversion slots have fueled growing demand for air freight. However, recent U.S. trade tariffs introduce new challenges that could affect the air freight market.

Currently, E-commerce accounts for approximately 20% of global air cargo tonnage, with the U.S. serving as a major market. Historically, most air freight entering the U.S. benefited from a de minimis threshold, allowing goods with a fair retail value not exceeding $800 to enter without tariffs and with minimal inspections. This streamlined process ensured fast and cost-effective deliveries.

In addition to the proposed tariffs detailed in Reed Smith’s Tariff Tracker, the U.S. plans to remove the de minimis exception for goods from China and Hong Kong, effective 2 May 2025. Under this new rule, duties will be applied based on the shipping method, with distinctions being made between goods sent via the international postal network and goods shipped by alternative methods.

The removal of the de minimis exception for goods coming from China and Hong Kong will result in a broader range of goods being subject to duties, as well as increased data filing requirements for border clearance. This change is likely to slow customs processing times and increase operational costs. The discontinuation of this exception will likely disrupt smaller shipments, particularly for e-commerce businesses that rely on swift and affordable air freight.

Impact on Freighter Aircraft Market:

As the U.S. trade tariff landscape continues to evolve, the full implications for the freighter aircraft market remain uncertain. The U.S. government has announced plans to eliminate the de minimis exception for all other countries subject to U.S. tariffs, once adequate systems are in place to efficiently process and collect duty revenue. Additionally, the list of country-specific tariffs remains subject to further modifications—this may involve the addition of more countries or an increase in the tariff rates currently imposed. 

In response to these developments, nations such as Canada and China have enacted reactive measures, instituting tariffs on U.S. goods entering their respective markets, with other nations likely to follow suit.  The implications for the air freighter market are vast and may include: 

• Slower conversion process and increased conversion costs: Existing disruptions in the supply chain for freighter aircraft conversions will be exacerbated by the U.S. trade tariffs, potentially triggering a ripple effect on timeliness and cost of air freighter conversions.  Specifically, these disruptions could include rising prices for essential parts or delays in obtaining such parts, thereby slowing the conversion process and driving up costs associated with freighter aircraft conversions
• Reduce demand for freighter aircraft: The uncertainty surrounding the future direction of the air freight market, due to the removal of the de minimis exception and the newly imposed ad valorem tariffs, may lead air freight operators to adopt a cautious "wait-and-see" approach, potentially slowing the demand for the expansion of freighter aircraft fleets.

New opportunities for air freight:

• Expansion to additional geographic markets and higher air cargo rates: Alternatively, air freight operators may take proactive measures to mitigate the impact of tariffs by relocating operations to alternative geographic markets. This has the potential to create new partnerships with countries not subject to the tariffs, which in turn may diversify existing freight routes and increase business for air freight carriers. 
• Higher air cargo rates: The inevitable increase in costs for conversions and increased supply chain disruptions may well lead to increased air freight rates. Businesses may become more willing to pay a premium for faster and more reliable transportation options. These rates may be a shared burden among entities in the logistics chain, including portions being passed on to the consumer.

As the situation develops, we will continue to monitor the evolving landscape of international trade and tariff impositions on behalf of affected parties.