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Boeing May Become a Target in a Trade War Over Trump’s Tariffs The tariffs on steel and aluminum that Mr. Trump announced last week have already turned iconic American businesses — Harley-Davidson, Levi’s, makers of Kentucky bourbon — into prey for trading partners bent on retaliation. Boeing, which sends 80 % of its commercial planes abroad, calls itself the nation’s biggest manufacturing exporter. So it is the company with the most at stake in a trade fight — especially in China, one of the fastest-growing aircraft markets. Singled out by the Trump administration as the nation’s primary trade adversary, China has the greatest incentive to respond to the tariffs, economists and other analysts say. “The likelihood of retaliation by their biggest single market, China, elevates this from an irritant to potentially disastrous, if not catastrophic,” said Richard Aboulafia, vice president of analysis at Teal Group Corporation, a consulting firm in Fairfax, Va. “A trade war is the simplest way to cut off this fantastic growth they have enjoyed.” Boeing has prospered since Mr. Trump’s election. Its shares have soared, and last year it posted record earnings and cash flow. Much of that money was made abroad, though, and a counterattack aimed at Boeing could reverberate into the farthest reaches of the nation’s industrial economy. The company employs 137,000 people in the U.S, nearly as many workers as the entire primary steel and aluminum industries. Many more work at its suppliers, from Kansas to Pennsylvania, and those employees would also be at risk of a gut punch if China and other countries chose to make an example of Boeing. “I’m really worried about what it’s going to do to us,” said James Springer, a mechanic who installs stow bins and class dividers on 787 Dreamliners at Boeing’s plant in North Charleston, S.C. “What will the E.U. and China do, especially China? They are one of our biggest customers now.” But China, too, depends on Boeing, and damage inflicted on the company would not be painless. China has a seemingly insatiable need for new aircraft, and can’t yet make them domestically. Boeing is also set to open a finishing plant near Shanghai this year, so the Chinese government may put quality jobs at risk if it were to cut the company off. “If China decides to retaliate, it hurts their airlines and their burgeoning aerospace industry,” said Scott Hamilton, the managing director at the Leeham Company, an aviation consulting firm in Bainbridge Island, Wash. “Why would you do that?” But if China wanted to exact revenge on the United States through Boeing, it would be uniquely positioned to do so. The government has a significant stake in its national airlines and can easily direct them to cancel orders. About a quarter of Boeing’s jetliners went to China last year, and analysts estimate that Chinese orders could account for up to a fifth of its backlog. Until now, Mr. Trump has been a puzzle that Boeing mostly seemed to have figured out. The president began the relationship even before his inauguration by proclaiming his displeasure at the cost of the next-generation Air Force One that Boeing is building. “Costs are out of control, more than $4 billion,” he declared on Twitter. “Cancel order!” He later told reporters that Boeing was “doing a little bit of a number,” and said, “We want Boeing to make a lot of money, but not that much money.” Photo: President Xi Jinping of China addressing employees at the Boeing plant in Everett, Wash., in 2015. China’s government has a significant stake in its national airlines and can direct decisions to make or cancel orders.  Honesty is the best policy. |
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I was in China in May 2008. I have been told they have 3 times higher "import tax", "tariff", "luxury tax" on many products such as high-end automobiles, Apple iPhones, luxury handbags, ..... The Summer Olympics was in August 2008. I had been told that their government would open "Travel visa" in Sept 2008 for the first time. I had been told that they can buy and sell the properties but NOT include the "land" because government own the land, people can only rent the land for 99 years. If you sold the properties, the next owners will continue the "lease agreement" for the rental land. If you are the first owner and lived there 8 years, the next owner can only have 91 years, when sold in 20 years the 3rd owner can have 71 years, ...... That is the reasons, rich Chinese come to foreign countries e.g. USA, Australia, UK, Canada, .... to purchase properties and own the land. The rich Chinese come to USA to buy luxury cars because there are no "import tax", "tariffs", "luxury tax" in USA, Canada, Australia, .... to satisfy their desire to own those things that they had to pay much more in China. I live in a Chinese community (not like that 20 yrs ago), they have car show every month at a parking lot that own by a Chinese jewelry merchant. Young Chinese like Ferrari and Lamborghini the most. Honesty is the best policy.
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China is a communist country. Their leader can decide what to do for China. There is no objection. In the recent communist meeting, they decided to allow Xi to be "President for Life". They used to have 5 years tenure for maximum 2 terms, but now he can be President for life. I hope he is not a dictator or an emperor. Actually, we shouldn't call him "president" because Mr. Xi is not elected by people. There was no presidential election. Mr. Xi should be called "Prime Minister" or "Chairman". In USA or other democracy countries, things can be more complicated and more intricate. President Trump announced to levy 25 % tariff on steel and 10 % on aluminum because he saw the "Trade Deficit" is all-time high in between U.S. and China. But Trump didn't know our allies countries, e.g. Canada and Mexico are the top export steel to USA. In addition to these tariffs hurt Boeing company the most because Boeing is the nation’s biggest manufacturing exporter. To increase tariffs on steel and aluminum will hurt Boeing cost to manufacture airplanes. According to CNBC report that steel on 2 % of China total export. But Canada is #1 exporter of steel to USA. If you check Boeing (BA) stock price, from $371.60 sharp drop to $322.30 today since Trump announcement. So, Gary Cohn quit his job as Economic Advisor as he can't agree with Trump. Today Mr. Larry Kudlaw replaces the position. Trump wants to target on China for "Trade Deficit", so Mr. Kudlaw will suggest Trump to levy tariffs on "consumer products". Things are very complicated. Honesty is the best policy.
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