The Chinese government has reportedly ordered local airlines to halt deliveries of aircraft made by the US aerospace giant Boeing as part of retaliatory measures against the Trump administration and its 145% tariffs on most Chinese-made goods.
Citing anonymous sources who are said to be familiar with the order, Bloomberg reported that carriers such as Air China, China Southern, and Donghai Airlines have been told to stop taking any new deliveries of Boeing aircraft, as well as any spare parts from US suppliers.
According to Boeing, the aircraft manufacturer currently has 130 unfilled aircraft orders from Chinese airlines, most of which are for its best-selling 737MAX single-aisle aircraft.
This number includes Cathay Pacific, which may or may not be subject to the order given that it is based in Hong Kong and has some limited autonomy from the mainland.
Even if the order doesn’t expressly include Hong Kong-based carriers, political pressure would likely be so great as to stop airlines in the territory from taking delivery of Boeing-made aircraft while it remains in force.
That being said, a 125% tariff imposed on US imports by Beijing has the practical effect of local airlines deferring deliveries because it more than doubles the price of the aircraft.
Last week, Delta Air Lines said it would not take delivery of any Airbus-made aircraft while the Trump administration’s tariffs on European-made goods remain in force.
Chief executive Ed Bastian said the airline was in discussion with Airbus, potentially with a view to negotiating a discount but otherwise to defer deliveries until the tariffs (which could rise from 10% to 20% after a 90-day pause elapses) have disappeared.
Of the 130 outstanding aircraft deliveries, around 10 aircraft have finished being built and are ready to be delivered to Chinese airlines. These Boeing 737MAX jets will be stranded at the manufacturer’s Renton facility until the dispute can be resolved.
This decision from the Chinese government should probably come as no surprise to anyone as Washington and Beijing see who will blink first in their tit-for-tat trade war.
But while the Trump administration has already exempted mobile phones and some other electricals from its import tariffs on Chinese-made goods, there are no signs that President Xi Jinping is interested in announcing similar carve-outs.
