If you want a visual of the escalating trade war between the United States and China, look no further than a Boeing 737 Max plane painted with the logo of a Chinese airline touching down at a Seattle airport over the weekend.
That’s after the Chinese government reportedly told airlines to stop taking deliveries of Boeing jets last week. Now at least two new jets that had been at a completion facility near Shanghai have left the country.
Tariffs are complicating the business of building aircraft, one of this country’s largest manufacturing and export industries.
Tariffs are not something the commercial jet sector is used to. Civil aircraft, and their engines and components, have moved about much of the globe duty-free ever since a free trade agreement in 1980.
By that time, airlines in the U.S. were deregulated, and demand for air travel was rising, said Daniel Bubb, an associate professor at the University of Nevada, Las Vegas.
“And so by having this free trade agreement, it enabled them to have planes manufactured at a very fast pace and be delivered in order to meet this demand,” he said.
Aircraft building became an international venture. Richard Aboulafia, managing director of AeroDynamic Advisory, said while Boeing assembles its jets in the U.S., they aren’t exclusively made here.
“They do a lot of business with Canadian companies, British companies, French companies. Half of the engine for the 737 Max is French,” he said.
Adding import taxes could drive up the company’s costs.
But perhaps more worrying, said Henry Harteveldt, an air travel expert at Atmosphere Research Group, is if countries fail to reach trade deals with the U.S., they could follow China’s lead.
“Airplanes are a very visible target to use to express your displeasure,” he said. Ordering them back to the U.S. sends a message.
Still, there’s global demand for American jets. So those planes China sent back? “Boeing will attempt to resell them to airlines elsewhere, and I think they'll find a ready market,” Harteveldt said.
Boeing has a backlog of over 6,000 jets. So they can repaint those planes, depending on who’s buying.
There’s another way uncertainty around tariffs could hurt aircraft makers, said Samuel Engel, a lecturer at Boston University: Already, air travel bookings have slowed this year.
“When the economy declines, airlines have less demand for their service, and therefore are less inclined to place orders for aircraft,” he said.
On the other hand?
“It is simply a truism of this industry that there is an enduring demand for people to get together face to face,” he said, which could give plane makers enough of a lift, despite tariffs.
