Boeing shares fall due to halted deliveries to China

Boeing shares fall due to halted deliveries to China

Boeing's stock prices fell on Tuesday after reports that China has halted deliveries of all new jets to airlines in the country. This is part of an escalating trade war affecting the world's two largest economies.

Responding to trade conflicts

Boeing shares ( B.A ), a component of the Dow Jones Industrial Average, fell 2% early in trading. A Bloomberg report cited that Chinese authorities have ordered their airlines not to accept any further Boeing deliveries. Neither Chinese authorities, Boeing nor the White House immediately responded to CNN's inquiries.

Consequences for the US economy

This decision is not only a setback for Boeing, America's largest exporter, but could also negatively impact the U.S. economy, which is the largest in the world. President Donald Trump has imposed tariffs on trading partners - including tariffs of up to 145% on many Chinese products. This has led to countermeasures from other countries, in some cases triggering a tit-for-tat situation that is already endangering businesses, production and jobs worldwide.

Boeing's vulnerable position

Trump's attitude towards China is particularly tense, with the escalating trade war everything from American farmers up to iPhone deliveries threatened - while at the same time the confusion over Exceptions and delays increase. Boeing is particularly vulnerable in the current trade conflict situation. Unlike many multinational companies, Boeing produces all of its aircraft in U.S. factories before selling nearly two-thirds of the commercial aircraft it produces to customers outside the United States.

Importance for the US economy

Despite its recent problems, Boeing remains an important part of the U.S. economy. The company estimates its annual contribution to the American economy at $79 billion and directly and indirectly supports 1.6 million jobs. Boeing employs 150,000 people in the USA.

Losses and market forecasts

Boeing has accumulated $51 billion in operating losses since 2018, the last year with a positive financial statement. China is the largest market for aircraft purchases; Boeing's own analysis estimated in August that Chinese airlines are expected to do so over the next 20 years Acquire 8,830 new aircraft become.

The influence of trade conflicts

Nevertheless, Boeing has been largely excluded from the Chinese market since 2019. In part, this is the result of trade tensions between China and the United States that began during Trump's first term. Boeing received orders for 122 aircraft from Chinese customers in 2017 and 2018. Orders for just 28 planes have come in over the past six years, and these have largely come from cargo airlines or Chinese leasing companies that may buy on behalf of airlines outside China. There is not a single order for a passenger aircraft from a Chinese airline.

Structural challenges for Boeing

These declines cannot only be attributed to trade conflicts. Internal problems at Boeing, including the grounding of its best-selling 737 Max after two fatal crashes in late 2018 and early 2019, also contributed to the situation. Deliveries to China came to a virtual standstill after the second crash as aviation authorities in China grounded the jets after the disasters and did not immediately allow the planes to return to service even after they were re-certified by other countries in late 2020. Deliveries only began to increase again last year.

Importance of deliveries at Boeing

Deliveries are crucial for Boeing because the company only gets paid upon delivery. Boeing initially produces the aircraft and receives most of the payment only after delivery of the finished product. Stopping those deliveries would be a major setback for Boeing, as the company had a total of 55 aircraft in stock at year-end 2024 that it was unable to deliver to customers, mostly in China and India.

Long-term impact of tariffs

Even before the tariffs were imposed, Boeing was struggling with declining sales in China. In response to the Trump administration's 145% tariffs on Chinese goods, China has now Tariffs of 125% to all imports from the United States, which is likely to make Boeing's jets unaffordable for Chinese customers even without new supply restrictions.