In a move to counter escalating trade tensions, China has suspended Boeing jet deliveries and halted purchases of US aviation equipment, threatening the aviation industry’s stability.
The Chinese government has instructed its airlines to halt deliveries of jets from US planemaker Boeing and suspend their purchase of aviation equipment and parts from US companies, according to a report by financial news outlet Bloomberg.
Impact on the Aviation Industry
The instructions come as the world’s two biggest economies impose tit-for-tat trade levies on each other in an escalating trade war. The move is likely to have significant implications for the aviation industry, with Chinese airlines facing higher costs and potentially considering alternatives from European manufacturer Airbus and homegrown manufacturer Comac.
A trade war occurs when two or more countries impose tariffs, quotas, or other trade restrictions on each other's 'goods and services'.
This can lead to higher prices for consumers, reduced exports, and economic losses for affected industries.
The US-China trade war, for example, saw the US impose tariffs on $360 billion worth of Chinese imports in 2019, while China retaliated with its own tariffs on $110 billion worth of US goods.
Trade War Escalation
The US has imposed tariffs of up to 145% on Chinese imports since President Donald Trump took office in January, while China has slapped duties of 125% on imports from the US. Beijing has called these moves ‘unlawful acts’ of ‘bullying,’ and the trade war has caused significant uncertainty for investors.
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Boeing’s Biggest Market Outside the US
Despite this development, Boeing had previously stated that China is its biggest market outside the US. The company’s planes are widely used in China, and the halt in deliveries could have significant implications for the company’s business in the country.
A Barrage of Tariffs
US President Donald Trump has unleashed a barrage of tariffs on foes and allies alike since taking office, including suspending a round of ‘reciprocal tariffs’ on most countries. However, he exempted China from this reprieve, sparking concerns about the stability of global trade.
