In a sharp escalation of trade tensions between China and the United States, Beijing has instructed its local airlines to halt all new deliveries of planes from US aerospace giant Boeing (BA.N). The action is in response to Trump's recent tariff increase on Chinese imports, which has now hit 145 per cent. In the recent tariff war, US President Donald Trump continues to put a strain on diplomatic and economic relations between the world's two biggest economies. The US just imposed broad-based duties on Chinese products, to which China reacted by imposing up to 125 per cent levies on American exports.

Boeing Faces Setback In Key Growth Market

Boeing, which has counted China as one of its biggest growth markets, will likely suffer the most from the decision. The aerospace company's shares fell close to 3 per cent in premarket trading after the news. Competitor European manufacturer Airbus (AIR.PA) stands to gain, as well as China's state-owned jet manufacturer COMAC. China's three largest airlines, Air China, China Eastern Airlines, and China Southern Airlines, had scheduled to take delivery of a total of 179 Boeing planes between 2025 and 2027. Those orders are now at risk, leaving Boeing's market share and future in the region uncertain.

Chinese carriers have also been ordered by sources quoted by Bloomberg to suspend the purchase of aircraft-related equipment and spare parts from US suppliers. This order will significantly increase maintenance expenses for American-built jets already in operation in Chinese airspace. Industry experts caution that shutting off components and maintenance services may disrupt airline operations in progress and heighten reliance on non-American vendors.

Chinese Government Contemplates Support for Impacted Airlines

With leasing and upkeep costs of Boeing planes set to increase, Beijing is said to be mulling economic support to national carriers that lease American-made planes. This aid will likely ease near-term financial pressure on Chinese aviation operators. Though there has not been a formal comment from Boeing on the recent development. Nevertheless, company insiders say the company is watching closely as the geopolitical environment changes.

Global Trade Under Threat As Negotiations Hit Standstill

With tariff tensions rising, trade analysts warn that bilateral goods trade between the US and China, which stood at more than 650 billion USD in 2024, could be set for a sharp deceleration. Even though President Trump signaled that there could be a future agreement with Beijing, there has been no concrete development so far. The tit-for-tat tariffs still shake markets around the world, attacking supply chains, aviation business, and diplomatic ties.

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