America's largest exporter was about to end, then customs tariffs

America's largest exporter was about to end, then customs tariffs

Boeing has been faced with a variety of problems in the past six years. In this way, new tariffs - like the existing - could move another violent stroke to the battered company. In view of the importance of Boeing as the largest exporter in the United States, this could also have an impact on the entire economy.

consequences of tariffs on Boeing and the US market

The prices for Boeing jets could increase considerably if other countries raise their own tariffs on US goods. The existing tariffs in the USA could also drive up the production costs for aircraft, since Boeing depends heavily on international suppliers. These challenges come in addition to the existing problems, including safety and quality defects that led to aircraft falls and the decommissioning of machines, as well as a strike that paralyzed production for two months at the end of last year. The company has also brought the company into a difficult situation.

economic concerns and the importance of the aviation industry

ron Epstein, an analyst for aerospace at the Bank of America, notes: "If you think of a manufacturing industry that exports net, why should you punish it?" Alarm bells already ring because of a possible recession in the United States. Customs tariffs on aircraft and components could affect production in many Aerospace factories as well as their suppliers and further accelerate the economic downturn.

Despite the numerous challenges, Boeing estimates that the company supports 1.6 million jobs directly and indirectly, including almost 150,000 own employees in the USA. In addition to the direct economic effects, problems with Boeing and the European competitor Airbus could also have an impact on the entire global aviation industry. Delays in the delivery of new jets could affect the settings in the industry.

Current developments in aircraft deliveries

Boeing will announce the financial figures for the first quarter early Wednesday, and the managers will speak to investors later in the morning. Customs will certainly be an issue - but how strongly they have an impact on it remains to be seen. A first indication of the existing problems was visible last weekend when two planes were sent back to the production facility in Seattle in a Boeing plant in China instead of being delivered to the Chinese customers. The return could be related to a penalty of 125 % to US imports, which represents a reaction to the American inch of 145 % to most Chinese imports.

China's market and the effects of the trade dispute

china is the largest and fastest growing market for commercial aircraft. Boeing's analysis shows that Chinese airlines will probably be acquired 8,830 new aircraft over the next 20 years, which corresponds to 10 % to 15 % of global demand. However, the trade conflicts between the United States and China have already led Boeing losing ground in competition with the European rival Airbus. Of 122 Boeing aircraft orders in 2017 and 2018, the number sagged in the following six years to only 28 orders that largely affected cargo machines or leasing from Chinese companies.

Problems in the supply chain and rising costs

Boeing cannot simply build aircraft in another factory outside the USA to escape tariffs because the company is the largest exporter in the country and no aircraft is installed in other countries. About 80 % of commercial jets also get into the hands of foreign airlines. Boeing CEO Kelly Ortberg explained in his recent testimony before the congress: "Free trade is of crucial importance for us. It creates long-term, high-quality jobs in the USA."

Boeing still has a massive order stock of 195 aircraft from Chinese airlines and even 678 other unconfirmed orders - many of which could also come from China. Even if aircraft orders from China are canceled, the company has a multi -year global order deficit that could enable alternative buyers. However, if tariffs are also levied on American aircraft in other countries, this could be more difficult.

increasing production costs and the effects on suppliers

The challenges of Boeing are not limited to the sale and delivery of aircraft; The construction itself could also be affected. The company is dependent on foreign parts that make up about 80 % of the content of its aircraft. The wings of the 787 Dreamliner - Boeing's most valuable and expensive aircraft - come from Japan, for example. The problem is reinforced by the long certification times of new American providers that can take over a year.

This means that Boeing remains dependent on foreign parts - which drives the costs for the construction of an aircraft, which is already $ 50 to $ 100 million. It remains unclear whether there is a Boeing customer who is willing to bear these additional costs. In addition, suppliers such as Spirit Aerosystems, from which Boeing obtains parts, have already warned investors from "considerable doubts" to the ability to stay in business. If the financial situation deteriorates, this could have far -reaching consequences for the entire aviation supplier industry.