In a major step showing increased tensions, China has suspended Boeing jets over trade issues. This comes after the United States imposed a 145% tariff on Chinese products, escalating the trade war between the two largest economies globally.
China’s three largest airlines, Air China, China Eastern, and China Southern, had initially intended to take 179 Boeing aircraft from 2025 to 2027, as reported by Bloomberg News.
Their intentions are now on hold. Chinese carriers have also been instructed to stop buying US-made aircraft equipment and spares.
This step has caused instability in the international aerospace industry. Airlines, suppliers, and plane manufacturers are now reassessing contracts worth billions of dollars. In fact, a few airline CEOS have already made clear that they would prefer to postpone deliveries rather than incur additional costs due to new tariffs.
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Boeing Jets Face Setback
Boeing shares fell 0.5% after the news. Although some analysts think that Boeing can redirect planes to other foreign carriers, they caution that losing the Chinese market, one of Boeing’s biggest, long term could be costly.
Meanwhile, Boeing’s European counterpart, Airbus, presently holds sway over the Chinese market but does not have the production capabilities to serve China’s needs independently.
On the other hand, China’s domestically produced plane, the C919, is still dependent on US-imported components. As Bank of America analyst Ron Epstein stated, “If China stops buying aircraft components from the US, the C919 program is halted or dead.”
Based on growing expenses for Chinese airlines, the government in Beijing is seeking financial relief for local carriers leasing Boeing planes.
Interestingly, China was the first airline to ground Boeing’s 737 MAX series following two deadly crashes in 2019 and 2018 and suspending most orders.
For the time being, the suspension of Boeing deliveries is another obstacle for the US producer, already dealing with regulatory challenges, labour strikes, and supply chain disruptions.
With tensions escalating, the aviation sector prepares for long-term repercussions in a world economy already strained by the threat of geopolitical conflict.
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