‘A lot at stake’ for Boeing as trade war with China escalates

One of Boeing’s best customers announced further retaliation against tariffs imposed by President Trump. It has the potential to directly impact the aerospace company as a potential trade war heats up.

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“China is the single biggest jetliner market in the world and the fastest growing jetliner market. So there’s a lot at stake here,” Aerospace analyst Richard Aboulafia said.

On Wednesday, Chinese officials discussed plans to place a 25 percent tariff on U.S. made aircraft. That includes aircraft weighing between 33,000 and 99,000 pounds.

It’s unclear if the tariff would actually include any of Boeing’s planes. Even Boeing’s lighter MAX generation of 737s may not be included, Forbes reports. Reuters reports the tariff does put a “question mark” over the 737 MAX 8.

“It was a very carefully calculated response,” Aboulafia said. “It didn’t get into the heart of the Boeing market, but it certainly came close. And by some interpretations could be extended to the 737 MAX level.”

The actions by the Chinese government follow a list of Chinese goods targeted for tariffs by the U.S. The tariffs were imposed after complaints that China pressured companies to disclose secrets in exchange for access to the Chinese market.

Trade war products

On Tuesday, the Trump administration released a list of more than 1,000 Chinese exports that could become targeted for tariffs. Aboulafia called the list “bizarre.” Many of the products were “unicorns,” they don’t even exist, he added.

Aboulafia says Boeing and the rest of the country will just have to wait and watch.

“I think what everyone is hoping that the Trump administration is mindful of this and doesn’t choose to make this worse … ”

If the Trump administration doesn’t agree to negotiate with the Chinese government, it’s likely there will be a shift from Boeing to Airbus — Boeing’s primary competitor. Worst case scenario is the cancellation of orders. Aboulafia says things probably won’t come to that.

“Things would have to ratchet up an awful lot,” he said.