Boeing Hit From All Sides in Trump’s Trade War
China tells domestic airlines not to place new orders for Boeing jets, adding pressure to the struggling American plane maker
ariffs may benefit Airbus, as Boeing’s production struggles and China develops its own jets.
In the global trade war, Boeing BA -2.36%decrease; red down pointing triangle is a big loser.
Chinese officials told domestic airlines not to place new orders for Boeing jets and are requiring carriers to seek approval before taking delivery of already-ordered aircraft, according to people familiar with the matter.
The tariff turmoil keeps getting worse for America’s largest exporter: Boeing’s vast and fragile supply chain is grappling with the end of its decadeslong duty-free status. Boeing faces retaliatory tariffs from other countries. And airlines are bracing for a drop in demand for air travel.
The developments add new pressure to the struggling jet maker, which burned through $14 billion last year and had aimed to be cash-flow positive by the end of this year. In the long run, the new tariff landscape could give a leg up to Boeing’s European rival, Airbus.
President Trump has said his tariff blitz is intended to boost U.S. manufacturing. But the trade war is hurting—not helping—one of the few major companies manufacturing high-tech products here, said Bank of America analyst Ron Epstein.
Even if China signs off on Boeing deliveries, airlines could opt for delays to avoid hefty duties. China is forecast to be Boeing’s largest market over the next two decades. Boeing would take a $1.2 billion hit if China halted all deliveries this year, according to an estimate by equity research firm Bernstein. The jet maker reported $67 billion in revenue last year.
China halted deliveries of Boeing jets following a pair of fatal MAX crashes in 2018 and 2019 and only resumed taking planes last summer. Boeing, which for years has been working to clear parked planes from its inventory, delivered a number of much-delayed planes to China earlier this year. Of the 130 airplanes Boeing has delivered globally this year through March, 18 went to Chinese airlines.
Few purchases are bigger than a jetliner. A single 737 MAX carries a list price of more than $100 million.
Global airlines for years have clamored for more of Boeing’s planes as air travel surged after the pandemic. Now, consumer sentiment is souring and some Americans have started canceling travel plans because of rising costs and fears that the economy could slide into a recession.
Ireland’s Ryanair, one of Europe’s biggest airlines, is set to receive 25 Boeing 737s in August but could delay taking the planes until next spring, Michael O’Leary, the airline’s CEO, said this week in a Financial Times interview.
Boeing CEO Kelly Ortberg has said he is concerned about the impact of tariffs on Boeing’s supply chain and the jet maker’s ability to export, in addition to direct costs that would result from duties on parts and materials.
The immediate fallout of China’s move is blunted by the fact that demand for Boeing planes far outpaces the jet maker’s pace of production. Boeing has an order backlog of some 5,500 planes; a plane ordered today won’t be delivered for close to a decade.
The longer-term impact could be more serious for Boeing’s business in China, a country that represents one-fifth of global airplane demand.
China’s Comac C919 jet, a competitor to Boeing’s 737, is years away from becoming a global force and still relies on U.S. suppliers for parts. It delivered just 13 airplanes in 2024.
But trade tensions and higher costs for U.S. planes could put Airbus, already outpacing Boeing in China, even further ahead if airlines start canceling orders. Airbus has two final-assembly lines in China; Boeing doesn’t build planes there but has a center where it completes mostly-finished planes.
Boeing and its biggest suppliers rely on a huge network of suppliers, some of which are small, low-margin businesses struggling with labor shortages and higher costs. The network has been crippled by years of production stops and starts, leading to the manufacturing woes that culminated in the blowout last year of a fuselage panel on an Alaska Airlines flight.
Those suppliers face new disruptions after the upending of a trade deal that since the 1980s has allowed Boeing, Airbus and other aerospace manufacturers to build aircraft largely without tariffs.
“Everybody is saying, ‘We don’t know who pays, but under no circumstances is it going to be us,’” said Richard Aboulafia, managing director of AeroDynamic Advisory, an aerospace consulting firm. “That’s a dangerous thing, because you could have the things freeze up.”
Write to Sharon Terlep at sharon.terlep@wsj.com
China is restricting new Boeing orders and deliveries amid trade war, sources say.
Boeing’s supply chain faces duty-free status end, retaliatory tariffs, and airline demand drop.