Trade war threat adds to Boeing woes
Already in crisis mode over the grounding of its top-selling 737 MAX aircraft, Boeing now finds itself at risk of becoming collateral damage in the US-China trade dispute.
The editor of Communist party-owned Global Times newspaper said Monday that Boeing’s order book could take a hit as Beijing parries Washington in the escalating trade fight.
“China may stop purchasing US agricultural products and energy, reduce Boeing orders and restrict US service trade with China,” Global Times editor Hu Xijin wrote on his verified Twitter account.
Talk of a Boeing hit came just after Beijing announced it will increase tariffs on $60 billion worth of US goods starting June 1, in retaliation for the latest round of US tariff hikes.
A Boeing spokesman struck a reassuring note, telling AFP, “we’re confident the US and China will continue trade discussions and come to an agreement that benefits both US and Chinese manufacturers and consumers.”
But the company’s share price fell 4.5 percent in afternoon trading to $338.74.
“Any significant reduction in orders would be bad for Boeing,” said Scott Hamilton of aviation consultancy Leeham Company. “However, China would hurt itself, too.” He noted that China is a supplier to Boeing and Shanghai is home to a Boeing plane finishing center.
In 2018, Boeing reported $13.8 billion in revenues from China, equivalent to nearly 14 percent of overall company sales.
During the past five years, about one in every four Boeing commercial jets went to an operator in China, supporting tens of thousands Boeing jobs, according to the company.
“It would be impossible for Boeing to not be wrapped up in this giant mess,” said Richard Aboulafia of the Teal Group, an aerospace consultancy.
“Jetliners are the US’ biggest manufactured export, and it’s hard to see any other large products China would buy to make the US happy,” Aboulafia said. “To look at it the other way, it’s hard to see what the Chinese would conspicuously not buy to signal their displeasure.”
Boeing is already under pressure after two deadly plane crashes forced the global grounding of its top-selling 737 MAX planes.
