Goodness, this is going to get messy…
In this post:
China tells airlines to stop taking delivery of Boeing jets
Bloomberg reports that the Chinese government has told its domestic airlines to stop taking delivery of aircraft from American aerospace giant Boeing, as tensions between Washington and Beijing continue to escalate.
We’ve seen President Trump impose tariffs of up to 145% on China, while President Xi has responded with tariffs of up to 125% on US imports, arguing that any further tariff hikes would just be pointless.
As part of this ongoing dispute, China has outright told its airlines to no longer take delivery of any Boeing aircraft, period. Furthermore, the government has told airlines to stop purchasing aircraft related equipment and parts from US companies. The Chinese government is reportedly considering helping airlines that lease Boeing jets and are facing higher costs.
Who knows how this is going to play out…
It’s hard to even have an educated take here on how this is going to play out, because the extent of the trade war we’re seeing is uncharted territory. Xi certainly doesn’t strike me as the kind of guy who likes to back down or who is willing to take a loss, no matter the cost, so that’s going to make this pretty challenging.
While the Chinese government directing airlines not to take delivery of planes with tariffs of course sounds bad, in reality, it’s not like airlines were going to take delivery of planes with 125% tariffs anyway. Heck, we’ve heard Delta CEO Ed Bastian say the airline won’t take delivery of any Airbus planes with tariffs, and that’s “just” 10%.
What an absolute mess for Boeing, since the aircraft manufacturer has no control over this situation, and is going to have to work with airline customers to make something work here. Never mind that Boeing is dealing with its own tariff issues, given that many aircraft parts are imported from abroad.
I think the big challenge here is that even if the amount of tariffs between the US and China were to decrease a bit, the animosity between the governments likely won’t go anywhere, and I wouldn’t be surprised to see the “no Boeing” policy stick around, at least unofficially.
For that matter, one wonders what this means for Cathay Pacific’s Boeing 777X order, with deliveries due starting in 2026. Of course that’s not imminent, and Cathay Pacific isn’t based in mainland China, but I also have a hard time imagining the airline would go against Beijing’s policies, especially given the evolution of Hong Kong politics.
Bottom line
The Chinese government has ordered domestic airlines to stop taking delivery of Boeing aircraft, and to stop buying aircraft parts manufactured in the United States. Admittedly these deliveries would’ve likely been deferred anyway due to the 145% tariffs, though having the government dictate such a policy is quite something.
Only time will tell how this plays out. Boeing has had a rough several years, and these trade wars definitely aren’t helping any potential recovery.
What do you make of China banning Boeing aircraft deliveries?
The problem isn't as big as the way its been frame, but it could be in the long term.
For now the Chinese Airlines have a contract and obligations with Boeing. The exposure of Boeing orders and commitments with China stands with 130 aircraft of a total world backlog of 5,500.
The potential problem its the grow of the Chinese markets in the long term which its forecast for a total of 20%...
The problem isn't as big as the way its been frame, but it could be in the long term.
For now the Chinese Airlines have a contract and obligations with Boeing. The exposure of Boeing orders and commitments with China stands with 130 aircraft of a total world backlog of 5,500.
The potential problem its the grow of the Chinese markets in the long term which its forecast for a total of 20% market share. And that´s the piece of the pay You do not want to lose.
The other problem its the impact on spare parts and components,
we already experience this with disruptions with the sanctions on titanium and other minerals from Russia.
Airbus will increase more its footprint in China.
DJT = Duche Bag!!
What a F'ing mess...... Thanks MAGA Idiots!
Herr Trumpf is making America great again! A great big wasteland.
A nation being run by idiots with a following of morons who are being idolized by schmucks.
And the remaining relatively sane individuals are getting the screw job, not to mention the world itself.
It ends with a bankrupt U.S.!
That was on the horizon and only brings more uncertainty to Boeing, depending on how long the ban will last.
It may give a boost to the Chinese COMAC C919, but we should not forget that a large number of components for that aircraft are manufactured in the US and could fall under export restrictions, if the US government so decides.
What is fairly clear to many economists is that the flow of trade will...
That was on the horizon and only brings more uncertainty to Boeing, depending on how long the ban will last.
It may give a boost to the Chinese COMAC C919, but we should not forget that a large number of components for that aircraft are manufactured in the US and could fall under export restrictions, if the US government so decides.
What is fairly clear to many economists is that the flow of trade will adjust and - instead of flowing to/from and through the US - will in the future bypass the US.
Not just U.S. government decisions. Chinese have restricted airline parts as well. The rest of the world has so many opportunities now that the U.S. is out of the picture.
Ben, shouldn't you have said: it’s not like airlines were going to take delivery of planes with 125% tariffs anyway. It's 125% on imports from the US, 145% on imports from China. I don't think any US airlines will be importing Cormacs anytime soon so there's (currently) no scenario where a 145% tariff would apply anyway.
China has placed to 125% tariff on imported US goods, which I assume would include Boeing planes
As if Boeing needed this !
How you treat your biggest donor (the country which finances your debt), your biggest customer and one of your biggest suppliers….
Another proof of the amateurism displayed last week in the USA.
Someone is embarassing his country and it is not Mr Xi.
Wonderful, Trump is running protectionism to help out *checks notes* Comac and Airbus.
This is kind of beautiful news in my opinion for America’s and the Western Worlds airlines as there is currently a back log for the narrow body MAX right now, allowing Boeing to focus on these. Bet you the same is true for the Wide-bodies.
And furbish them with what, exactly?
Did you forget that seat deliveries (already severely backlogged for many carriers) are tied to expectant aircraft deliveries; that they're certified per model for each carrier; and can sometimes be patented for custom use by only a single carrier/holding?
Doesn't do "America's and Western Worlds airlines" much good to get aircraft, if it's going to take XX months/years for the seats with which to outfit those aircraft, to be...
And furbish them with what, exactly?
Did you forget that seat deliveries (already severely backlogged for many carriers) are tied to expectant aircraft deliveries; that they're certified per model for each carrier; and can sometimes be patented for custom use by only a single carrier/holding?
Doesn't do "America's and Western Worlds airlines" much good to get aircraft, if it's going to take XX months/years for the seats with which to outfit those aircraft, to be delivered.
Could an airline just have it US registered or lease the planes from a lessor in the US
Now that is a smart question
Trump for the win again!
Karma is a bitch, Americastan.
Good luck with Orange Putin and Elonia.
I am sure Israel and AIPAC will come and save you.
Why drag Israel into this ? Latent anti Israel bias ? Or perhaps a fan of "Jews control the world" or at least America ?
Isreal and Saudi (I guess they could be called out too) are the only two traditional Allies of the US (of any economic merit) that the current administration hasn't straight up insulted or made an other of.
Hmm, about Cathay Pacific, has the US also applied tariffs above 10% on Hong Kong?
Yes. Hong Kong goods export to U.S. are treated as originated from China.
HKG is still treated as a 3rd country with a different rate
Hong Kong is treated as part of China for these tariffs so will be charged 145% for goods imported into the US. Hong Kong will not be imposing a tariff on American goods going into HK as it is a free port; I imagine this will be quite a loophole for mainlanders who want (relatively, because those products will suffer from tariffs in the supply chain) tariff free access to American goods.
I would point out that your impression that Xi is unlikely to back down is based on your impression of his personality, not an analysis of the importance of a massive trade surplus in a dollar-peg economy with an unpopped property bubble.
Except he is probably just going to send President Pussygrabber a big beautiful letter and Orange Larry the Mental Guy will back off the trade war.
Well, for the next 60 days, while he is negotiating with Russia and Iran that is unlikely. The mental guy act is why we are talking about recession, which is why the price of oil has plummeted, coincidentally during negotiations with 2 countries, whose current cash flow is almost entirely dependent on oil prices.
Rob, you’re not factoring culture…China will not “lose face” in a showdown…it’s a core cultural matter
…. and so it begins, who knows how it will end?
Hopefully with a big, beautiful impeachment.
Sadly Mary, one expects that in the end the world economy will suffer long before anything like an impeachment.
There is one other possibility …. but best not to go there.
@Mary An impeachment means nothing. Trump has already been impeached twice in his first time but was not removed from Office. Impeachment lies with the House of Representatives (Lower House) and removal from Office lies with the Senate (Upper House). An impeachment is a charge or charges (written accusation). Currently, the Republican Party controls both chambers so it is highly unlikely that even an impeachment will occur at the moment.
@Stanley C
If Trump makes the R electeds feel threatened enough it could, even if they are fine to keep toeing the line for him now. I like to think of it this way, Trump can't run oppo campaigns against them in revenge if he's in federal prison. Which is where he would be right now if Moscow Mitch hadn't squelched the second impeachment for him.
Ahh shucks.