The trade war between the US and China is becoming increasingly bizarre. As a countermeasure against Trump’s tariffs of up to 145% on Chinese exports, Beijing has now instructed its own state airlines to suspend purchases of Boeing-built aircraft and stop buying components from the U.S. aircraft manufacturer. This is exactly what CargoForwarder Global predicted on 06APR: The Trump tariffs are an economic stimulus program for China’s own aviation industry, especially the Comac model series C919.
Boeing’s expulsion from China is likely to be an economic stimulus program for the state-owned Chinese aircraft manufacturer COMAC. Unintentionally, the USA is now providing active development aid for the newcomer, especially for its flagship, COMAC C919. This was already predicted by CargoForwarder Global in a report aired on 06APR. The aircraft can accommodate 168 passengers and is able to fly 4,075 km non-stop. This makes the jetliner a serious competitor for the B737 series, but also for the Airbus A320 family. The COMAC management speaks of 820 orders from 28 customers received so far. Supposedly, the numbers will increase quickly.
Stock exchange is not amused
Following Beijing government’s announcement of their Boeing boycott, the share price of the manufacturer fell by USD 2.79%. It had already gone south during the past three weeks falling from USD 182 on 25MAR to USD 156 on 15APR. However, the share prices of Chinese airlines also fell notably, as many Boeing variants belong to their fleets.
The basic idea of Trump’s tariff policy is to motivate industries to produce in the U.S. and not abroad. What seems to be a smart idea at first glance encounters in practice mounting hurdles demonstrated by Beijing’s embargo of rear earths exports or the EU’s threat to impose hard countermeasures hurting key U.S. products. In the meantime, Trump has exempted the import of electronic products such as smartphones or laptops from the China tariffs, most of which are produced in Chongqing, Chengdu or Zhengzhou.
A policy guided by irrationality
Specifically, China’s Boeing boycott is likely to hit the autocrat in the White House hard. After all, this retaliatory move threatens to position the U.S. aircraft manufacturer further behind its European arch-rival Airbus in terms of both sales figures and order volume. At the same time, Beijing’s bold Boeing expulsion is likely to further unsettle the crisis-ridden employees of the U.S. aircraft manufacturer, who were lately confronted with negative headlines such as the crash of two B737 MAXs casing hundreds of victims, the loss of a cabin door during an Alaska Airlines flight and recurring technical defects on many aircraft. These and other mishaps have severely damaged the reputation of the aircraft manufacturer, which the aviation industry once valued for its outstanding reliability and advanced safety architecture.
The support is crumbling
In the meantime, Trump’s zig-zagging tariff policy provokes increasing resistance, not least triggered by falling government bonds, the harbingers of a recession, worrying even his hard-core followers.
According to Boeing’s 2024 Commercial Market Outlook, China Southern, Air China, Hainan Airlines et alia account for around 20% of the global demand for passenger and freighter newbuilds over the next two decades with roughly 50% made by Boeing. The U.S. airframer could not initially be reached for comment.
Hong Kong stops mail services to the U.S.
Meanwhile, the Hong Kong Post Office has announced that it will no longer send shipments by sea to the United States. As of April 27, the airmail service to the United States will also be discontinued. The reason given for this is the “harassing” U.S. tariffs.
When sending goods to the U.S., Hong Kongers must be prepared to pay exorbitant fees due to the “unreasonable and tyrannical measures” taken by the U.S., said Hong Kong Post in a statement. Other mail items containing only documents would not be affected.
