Trade War Escalates: China Halts Boeing Plane Deliveries, Orders Airlines to Shun New Purchases

New Delhi (The Uttam Hindu): The effect of the deepening trade tension between the US and China is now visible on the aviation industry as well. China has banned the delivery of new aircraft from the American aircraft manufacturer Boeing with immediate effect. Along with this, the Chinese government has given clear instructions to all its airlines that they should neither buy any new aircraft from Boeing nor order any equipment or parts related to aircraft from America.

This tough step has been taken after US President Donald Trump's decision to impose heavy tariffs of up to 145 percent on Chinese imports. In response to this tariff war, China also announced retaliatory tariffs of up to 125 percent on American products. Due to these new duties, the cost of aircraft and their parts coming from America has more than doubled in China, making it economically unviable for Chinese airlines to buy and operate Boeing aircraft.

According to a Bloomberg report, China is now looking for ways to help airlines that have already leased Boeing planes and are now facing increased costs. China's decision is a serious challenge for Boeing, as China is one of the fastest growing aviation markets in the world. It is estimated that about 20 percent of the total global aircraft demand in the next 20 years will come from China alone. In 2018, about one-fourth (25%) of all the aircraft sold by Boeing were delivered to China.

However, in recent years, China has not placed any major new orders with Boeing due to the US-China trade war and questions raised about the quality of Boeing's aircraft (especially the grounding of 737 Max aircraft after two fatal accidents in 2019, in which China was the first to ban). Now a complete ban on deliveries may increase Boeing's problems further.