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Aerospace & Defense

The compliance complexity is real. So is the recovery opportunity.

Aerospace OEMs, defense contractors, and MRO providers operate at the intersection of CBP customs law, ITAR export controls, and EAR dual-use regulations. The companies in this sector import and export high-value components, assemblies, and technical data across global supply chains that CBP, DDTC, and BIS all scrutinize simultaneously. Getting one agency wrong creates exposure with all three.

Are you overpaying?

The Tariff Landscape for Aerospace & Defense

Aerospace and defense imports carry tariff exposure that is high in value and low in visibility. Section 232 steel and aluminum tariffs hit structural components and specialty alloys used throughout airframe and engine manufacturing. Section 301 tariffs reach into avionics, electronics, and precision components sourced from China. IEEPA actions have layered additional exposure on goods that were previously low or zero-rated. And because aerospace procurement operates on long-cycle contracts and multi-year sourcing agreements, duty cost increases from new tariff actions often aren't caught until they've compounded across dozens of shipments.

MRO providers face a distinct challenge. Replacement parts, rotables, and repairables move back and forth across borders continuously — imported for repair, exported after servicing, returned to foreign operators. Each leg of that cycle creates duty and drawback implications that most MRO operations have never systematically tracked. The entries are filed. The recovery is not.

Recovery Opportunities

Manufacturing Drawback on Exported Aerospace Components

Aerospace manufacturers that import raw materials, specialty alloys, or precision components and incorporate them into aircraft, engines, or defense systems that are exported qualify for manufacturing drawback on the duties paid at import. Given the high unit value of aerospace inputs, individual claims in this sector can be substantial. Caspian maps every eligible import-to-export relationship across your production history and files automatically.

MRO Drawback on Repaired and Returned Components

Aircraft parts and components imported for repair or overhaul and subsequently re-exported to foreign operators generate drawback eligibility that MRO providers almost universally leave on the table. The tracking complexity — matching inbound repair orders to outbound return shipments at the part number level, across multiple aircraft operators and tail numbers — is exactly the kind of data reconciliation problem Caspian was built to solve.

Section 232 Overpayments on Specialty Alloys & Structural Materials

Aerospace-grade aluminum, titanium, and specialty steel alloys are among the most frequently misclassified materials under the Section 232 tariff framework. The line between tariffed raw material and exempt downstream aerospace component is contested at the HTS level, and CBP has applied it inconsistently across ports. Companies importing specialty materials for aerospace applications without a formal classification review are likely overpaying.

Don't Get Caught Off Guard

Aerospace & Defense Compliance Risks

No sector faces a more complex regulatory compliance environment at the border than aerospace and defense. CBP handles the duty side. DDTC enforces ITAR. BIS enforces the EAR. All three can initiate enforcement independently, and a violation with one agency rarely stays contained to one agency.

ITAR Export Licensing and CBP Coordination

Defense articles and technical data controlled under the International Traffic in Arms Regulations require DDTC export licenses before they leave the country, and CBP enforces ITAR compliance at the point of export. Misclassification of a controlled article as EAR99 or commercial, incorrect license exception claims, or export of ITAR-controlled goods without a valid license can result in DDTC civil penalties, CBP seizure, and debarment from government contracting.

EAR Dual-Use Classification on Avionics & Components

vionics, navigation systems, and precision aerospace components frequently sit at the boundary between commercial and dual-use classification under the Export Administration Regulations. An item classified as EAR99 that should carry an ECCN creates both export violation exposure and potential drawback complications on the export record.

Counterfeit Parts and CBP Enforcement

Counterfeit aerospace components are a CBP enforcement priority, and the sector's reliance on secondary market parts, particularly in MRO, creates supply chain exposure that intersects directly with trade compliance. CBP can seize shipments suspected of containing counterfeit parts, deny entry, and refer cases to criminal enforcement regardless of whether the importer had knowledge of the counterfeiting. Companies importing through distributors or secondary market channels without documented supplier qualification programs are carrying both safety and compliance risk.

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Frequently Asked Questions

What drawback opportunities exist in aerospace and defense?
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Aerospace OEMs, defense contractors, and MRO (maintenance, repair, overhaul) providers have very high per-transaction value but smaller company counts than other sectors. Imports include high-value aircraft components, engines, avionics, specialty alloys, and defense-specific materials. Many of these are re-exported as finished aircraft, parts shipments to international customers, or MRO returns. Per-claim recovery dollars are among the largest in any sector.

How do ITAR and EAR affect drawback?
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ITAR (International Traffic in Arms Regulations) and EAR (Export Administration Regulations) govern export licensing for defense and dual-use goods. They don't change drawback eligibility, which is a CBP function, but they add a layer of export documentation that needs to be reconciled with CBP records. Export licenses, end-use certifications, and re-export approvals run parallel to the documentation drawback claims require.

Can MRO providers file drawback?
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Yes. MRO providers import parts and components for repair work on aircraft that are subsequently re-exported, which fits the drawback profile directly. Imported parts used in repairs to exported aircraft qualify for Manufacturing Drawback or Substitution Drawback depending on the circumstances. For MRO operations with significant international customer bases, this is a recovery path frequently overlooked.

What about defense contracts with foreign military sales?
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Foreign Military Sales (FMS) and Direct Commercial Sales (DCS) to international government customers create export transactions that can support drawback claims on the underlying imported inputs. The export documentation requirements are heavier than in commercial sectors, but the import-export linkage is typically clearer because of the contract-level traceability.

How does HTS classification work for aerospace and defense?
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Aerospace and defense products span multiple HTS chapters, including Chapter 88 (aircraft and aircraft parts), Chapter 90 (instruments and avionics), and various chapters for specialty metals and components. Many aerospace HTS codes carry duty-free or low-duty status under specific programs such as the Civil Aircraft Agreement, but eligibility depends on correct classification and end-use documentation. Caspian's Classification work confirms eligibility and locks in correct codes.

Does Caspian handle classified or controlled-information imports?
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Caspian operates on customs data, which is regulated but not classified. ITAR and EAR-controlled technical data are governed separately and don't flow through the platform. Customers handling classified work typically run drawback on the unclassified customs records of imported components, with controlled technical information managed through their existing compliance infrastructure.