Unlocking the Skies: How Expanding the 1979 Aerospace Treaty Could Fuel a $75B U.S. Surplus

The 1979 Agreement on Trade in Civil Aircraft has been the bedrock of U.S. aerospace dominance, enabling a $75 billion annual trade surplus and $135 billion in exports. Yet, as geopolitical tensions and evolving trade policies disrupt this legacy, a historic opportunity is emerging: expanding the treaty to include rising markets like China and India could supercharge U.S. manufacturers' growth while countering competitive threats from Airbus and China's C919. For investors, this is a moment to act.

The Treaty's Power—and Its Limits

Since 1980, the 1979 pact has eliminated tariffs on aircraft, engines, and parts among 33 signatories, fueling U.S. leadership in aviation. But today, China and India—both now pivotal aerospace markets—remain excluded, holding only observer status. This omission is a strategic misstep. China alone accounts for 20% of global aircraft demand, and India's domestic market is projected to grow at 8% annually until 2035. Meanwhile, U.S. manufacturers face 25% tariffs on Canadian/Mexican aircraft parts and 20% on Chinese goods, complicating supply chains and pricing competitiveness.

Enter AerCap's lobbying push. CEO Aengus Kelly has championed a “Trump trade accord” to expand the treaty, arguing that including China and India could level the playing field and unlock a $75 billion surplus. The logic is clear: tariff-free access to these markets would slash costs for Boeing, GE Aerospace, and Raytheon Technologies (RTX), enabling them to undercut rivals like Airbus and China's COMAC.

Why the Clock Is Ticking

Risks of inaction are stark:
1. Stalled Deliveries: Boeing's $18 billion backlog of undelivered 737 MAXs to China highlights the cost of trade friction. A delayed treaty expansion could see China accelerate C919 certification, eroding Boeing's market share.
2. Supply Chain Vulnerabilities: GE estimates tariffs could cost $500 million in 2025 alone, forcing firms to divert production to tariff-free zones or pass costs to customers—a risky gamble in a price-sensitive market.
3. Competitor Gains: Airbus's 2024 orders surged 30% in Asia, while C919 certification advances could attract $1 trillion in orders by 2040. Without treaty changes, U.S. firms risk losing this race.

The Investment Case: Act Now Before It's Too Late

The path to $75 billion is clear—but time is running out. Investors should prioritize Boeing, GE Aerospace, and Raytheon Technologies (RTX):

1. Boeing (BA): A treaty expansion could thaw China's $15 billion in frozen orders, unlocking a liquidity boost and restoring its 737 MAX backlog. With 70% of C919's engines supplied by CFM International (a GE/Safran joint venture), Boeing's alignment with GE positions it to dominate in a post-tariff world.
2. GE Aerospace (GE): As the world's top engine supplier, tariff removal would slash costs on its LEAP engine, which powers 70% of new narrow-body jets. GE's foreign trade zone strategies (e.g., Singapore) are a stopgap—but treaty expansion would make these steps obsolete.
3. Raytheon Technologies (RTX): Its $50 billion in global defense and aerospace contracts could expand into India, a treaty signatory, enabling sales of radar systems and propulsion tech.

The Geopolitical Clock: 2035 or Bust

The 2035 global aircraft demand forecast—projected at 45,000 new planes—is a goldmine. But without treaty expansion by then, U.S. firms risk ceding 20–30% of Asian markets to rivals. The window to act is narrowing: China's C919 certification could be finalized by 2026, and India's $45 billion defense modernization plan will favor suppliers with tariff-free access.

Conclusion: The Sky's the Limit—If We Act Now

The 1979 treaty's expansion is not just a trade deal—it's a strategic imperative to secure U.S. aerospace leadership. Investors ignoring this opportunity risk missing the next decade's biggest industrial boom. With AerCap's push gaining momentum and the 2035 horizon looming, Boeing, GE, and RTX are the levers to pull today. The skies will reward the bold.