TLDR
- China has ordered its airlines to halt Boeing jet deliveries as part of escalating trade war
- Boeing shares fell 2.4% to $155.52 on Tuesday following the news
- China represents a critical market with projected need for 8,830 planes over next 20 years
- Boeing has struggled financially with $51 billion in operating losses since 2018
- Chinese airlines were also asked not to purchase aircraft-related gear from U.S. companies
Boeing faced a new setback on Tuesday as reports emerged that China has ordered its airlines to stop accepting deliveries of Boeing jets. This action comes as part of the growing trade tensions between the world’s two largest economies.
Boeing stock fell 2.4% to $155.52 following the Bloomberg report. The broader market also declined, with the S&P 500 down 0.2% and the Dow Jones Industrial Average dropping 0.4%.
The reported halt in deliveries strikes a blow to Boeing, America’s largest exporter. The aerospace giant builds all its planes in U.S. factories and sends nearly two-thirds of its commercial aircraft to international customers.
Trade War Impact
This development is the latest chapter in what has become an escalating trade conflict. President Donald Trump recently imposed tariffs of at least 145% on many Chinese products, triggering retaliatory measures.
Trump addressed the situation on social media Tuesday, stating that China “just reneged on the big Boeing deal, saying that they will ‘not take possession’ of fully committed to aircraft.”
For Boeing, the timing couldn’t be worse. The company has been struggling financially for years, accumulating $51 billion in operating losses since 2018 – the last year it reported an annual profit.
China’s market is crucial for aircraft manufacturers. Boeing’s own analysis estimates Chinese airlines will need 8,830 new planes over the next 20 years.
Even before this latest development, Boeing had largely been shut out of the Chinese market since 2019. The company took orders for 122 planes from Chinese customers in 2017 and 2018, but has received orders for just 28 planes in the six years since then.
Delivery Challenges
The delivery halt creates particular challenges for Boeing because the company receives most of its payment after delivering finished aircraft.
As of the end of 2024, Boeing had 55 planes in inventory that it hasn’t been able to deliver to customers, primarily those in China and India.
According to Jefferies analyst Sheila Kahyaoglu, only about 130 planes in Boeing’s backlog of more than 5,600 are destined for Chinese buyers. However, this figure rises to approximately 160 jets when including Hong Kong.
“We are not surprised at the halt, as aircraft deliveries tend to be leveraged within trade conversations,” wrote Kahyaoglu. “There is also likely some hope that this is temporary and provides China a bargaining chip in any negotiation.”
Broader Trade Implications
The aerospace giant isn’t the only company caught in the crossfire of the U.S.-China trade dispute. Tesla recently stopped taking orders in China for its Model S and X vehicles, which are exported from the U.S., due to rising tariffs.
China has also halted exports of certain critical minerals needed to make everything from cars to drones and missiles, potentially causing disruptions and higher costs across multiple industries.
In Europe, Ryanair has warned it may delay deliveries of Boeing aircraft if U.S. tariffs make them more expensive, according to the Financial Times.
Wells Fargo analyst Matthew Akers has trimmed his price target for Boeing stock to $111 from $113, citing concerns about “a global economic slowdown” affecting both original equipment and aftermarket sales.
China had already placed tariffs of 125% on all imports from the United States. Boeing’s jets cost tens of millions of dollars each, making them essentially unaffordable to Chinese customers when tariffs more than double the price.
The halt in deliveries represents just one aspect of Boeing’s challenges in China. The company has also faced issues related to the grounding of its 737 Max following fatal crashes in 2018 and 2019.
Chinese aviation authorities did not immediately allow the 737 Max to return to service even after other countries cleared the plane to carry passengers in late 2020. Deliveries only started to rebound last year.
Boeing continues to play a major role in the U.S. economy, contributing an estimated $79 billion and supporting 1.6 million jobs both directly and indirectly. The company employs nearly 150,000 people in the United States.
Neither Chinese authorities, Boeing, nor the White House immediately responded to requests for comment on the report of halted deliveries.
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