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APRIL 2018

Week 14


Beijing threatens U.S. with 25% tariff on Boeing aircraft

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April 6th 2018

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On Wednesday, the Chinese government announced its intention to impose a 25% import tariff on all U.S.-manufactured single aisle aircraft that weighed between 15 tons and 45 tons. Read More » The planned ruling includes all B737NG variants but not the MAX programme lines.

If materialized, the announcement would be a heavy blow to the U.S. manufacturer, which has established a multi-billion dollar order book for its jets at Mainland carriers. In 2017, approximately one third of all B737NG deliveries went to Mainland airlines.

This week’s announcement could have been much worse for Boeing. China excluded the new MAX series from its sanctions. The super power has ordered more than 250 MAXs from Boeing, according to order books, although the true figure is likely to be much higher as many Mainland customers do not disclose their orders ahead of time.

Boeing plans to cease production of the B737NG in 2019, but Chinese airlines are still expecting to take delivery of approximately 35 B737-800 before the cut-off date. It remains to be seen whether these deliveries will go ahead as scheduled, be converted to the MAX or cancelled.

Beijing has not indicated when the potential 25% import tariff will come into effect and has not revealed if previously signed orders, including the 35 -800s might be affected. Deposits and guarantees have been paid on these orders.

“Boeing is confident that dialogue continues. While both governments have outlined positions that could do harm to the global aerospace industry, neither has yet imposed these drastic measures. We will continue in our own efforts to proactively engage both governments and build on the recent assurances by U.S. and Chinese leaders that productive talks are ongoing. A strong and vibrant aerospace industry is important to the economic prosperity and national security of both countries,” the U.S. manufacturer said on Wednesday.

Chinese airlines could shift their focus to the Airbus A320neo Family as a result of the tariff threat although Airbus’ order books are nearly full and aircraft will not be available to some carriers as early as they hope.

Beijing’s punitive tariff announcement was in retaliation to the U.S. announcement that duties of 25% tariff would soon apply to 1,300 Chinese made products.

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