| Even as President Donald Trump delayed draconian tariffs for dozens of countries on Wednesday, he raised import taxes on China. Today the White House confirmed a rate of at least 145%. Aviation reporter Julie Johnsson explains why that could be a huge problem for planemaker Boeing. Plus Trump disrupts a key bargain between politicians and the American consumer, and the race to bring F1 to Africa heats up after 30 years away. If this email was forwarded to you, click here to sign up. Boeing Co.'s China sales peaked in 2018, when a quarter of its new jets ended up in the mainland. It delivered 181 single-aisle 737s and more than two dozen widebodies that year. The company even opened a campus near Shanghai to install cabin interiors and handle local deliveries. Since then, it's been in a rapid descent. America's biggest export machine hasn't had a large-scale airplane order from China since 2017. This year the company will deliver 40 of its 737 Max jets to China, according to researcher Cirium Ascend. But those shipments are in question as the US and China lurch toward an all-out trade war. Worse, the growing trade tensions could scuttle a potential order for hundreds of planes that's been in the works for years.  An Air China Boeing 737-800 plane lands Thursday at Beijing Capital International Airport. Photographer: Wang Zhao/AFP/Getty Images In January, Chief Executive Officer Kelly Ortberg was upbeat about the prospects of a deal despite the administration's growing drumbeat of tariff talk. "We certainly hope that there's an opportunity for some additional orders in the next year with China," he said in an interview. The fresh uncertainty and lost opportunity underscore the havoc that tariffs—even those intended to foster American manufacturing—can wreak on US industrial champions. Although China hasn't publicly targeted Boeing with its trade measures, it has largely favored Airbus SE for its jetliner purchases in recent years. The European company took the lead there in 2019, when China was the first to ground Boeing's 737 Max after two fatal accidents. With US-China trade tensions simmering, Boeing has announced only 28 orders from China-based airlines and leasing companies in the past six years, while Airbus's sales have flourished. "China has been taking it out on Boeing," says George Ferguson, an analyst with Bloomberg Intelligence. "I think Boeing's almost at the point where there's nothing left to lose." One factor that might bolster Boeing's position is China's insatiable appetite for jets: 8,830 aircraft valued at more than $1.2 trillion in the next two decades, Boeing predicts. The country's airlines won't want to commit solely to Airbus for those orders, because a single supplier would make it harder to negotiate better prices. And with only one manufacturer, Comac, which makes no widebodies at all, China's domestic industry is far from able to fulfill that demand. Furthermore, Comac's most important model, the single-aisle C919, uses engines made in the US, which means the White House could hobble the Chinese company by barring their export. "The Chinese need to tread carefully," Ferguson says. "They aren't far along enough in aerospace to completely sever the relationship with the US." Boeing is the rare American company that's historically generated a trade surplus with China, a market it helped pioneer a half-century ago. It builds its planes in the US, where 85% of its 160,000 workers are based. And it says it supports almost 10,000 US parts suppliers. Boeing didn't respond to a request for comment for this story. In his first term, Trump skirmished with China on trade, though Boeing's difficulties then were mostly self-inflicted with the 737 crashes. Now, with the president implementing levies that would more than double the cost of imports from China, and the Chinese government responding with an 84% tariff on American goods, it's far from clear how the tensions will play out. One school of thought is that the US president is simply amping up the pressure to get new trade agreements more favorable to the US–what appears to have happened Wednesday when Trump backed away from so-called reciprocal tariffs against dozens of countries: "Escalate to de-escalate, essentially," Seth Seifman, an analyst with JPMorgan, wrote in an April 3 report. "A key risk, in our view, is that other governments have their own agency and constituencies to satisfy." The century-old manufacturer hasn't yet shown any ill effects from the latest trade sparring, and in the first quarter the company delivered more planes than analysts expected. That tally included 12 Max jets handed off to Chinese operators, which will reduce the financial drag from planes built prior to 2023. But Boeing still has aircraft that have been parked for years; managers call it a "shadow factory" that they urgently want to close down this year. That, too, risks being delayed. Boeing's biggest worry is the prospect of Trump's trade wars triggering a recession that would spur airlines worldwide to defer plane orders even as manufacturing costs are rising, says Adam Pilarski, president of consulting firm Avitas Inc. "In the long term, not good things will happen because we, the US, will be losing our position in the world," he says. "And that includes airplane production." | 
No comments:
Post a Comment