Goodness, this is going to get messy…
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?
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