Boeing, China, and Tariffs: A Slow-Burn Crisis

This is not a new crisis — it's a recurring one that has escalated to its most serious level yet. Here's the timeline that matters: April 2025: The Freeze After Trump imposed tariffs as high as 145% on Chinese goods, China retaliated with tariffs of up to 125% on US imports. Beijing ordered Chinese airlines to stop accepting Boeing deliveries and halt purchases of US aircraft parts entirely. At least three 737 MAXs were returned to the US from Boeing's Zhoushan completion center, painted in Xiamen Airlines livery. Boeing's CFO confirmed on an earnings call that customers in China were not accepting new aircraft due to tariffs, and the company was assessing options to remarket already-built aircraft. Boeing had planned 50 deliveries to China in 2025, with 41 in production or pre-built. May–June 2025: Temporary Thaw The US and China agreed to a 90-day tariff reduction — US tariffs on Chinese goods cut to 30%, Chinese tariffs on US goods to 10%. China lifted the delivery ban, and Boeing resumed deliveries to China in June, starting with Xiamen Airlines jets returning to Zhoushan. April 2026: The 90-Day Window Has Expired This is a critical period. The 90-day truce from May 2025 expired in August 2025. The current tariff status — whether the reduction held, lapsed, or was replaced — is unclear from available sources. With impeccable timing, BNP Paribas sent this note last Tuesday: "We are monitoring deliveries of 737 fuselages, which are delivered via rail from the former Spirit facility in Wichita, KS to Renton, WA for final assembly. We counted ~38 fuselages in March, slightly below BA's target production rate at 42/month. We believe our data is a good indicator of production over the longer-term, but may not match up with BA's production month to month." What is clear is that Boeing's backlog includes approximately 130 unfilled orders from Chinese airlines and lessors, and a significant portion of its 760+ "unidentified customer" orders is believed to be destined for China. The Structural Problem Boeing CEO Kelly Ortberg has publicly opposed tariffs, stating, "Free trade is very important to us. We really are the ideal kind of export company where we're outselling internationally. It's creating US jobs. So it's important that we continue to have access to that market." The vulnerability is structural: Boeing produces entirely in the US but sells roughly two-thirds of its aircraft to export customers. All 521 777X orders are from non-US airlines. If retaliatory tariffs persist or escalate, Boeing faces the prospect of being effectively confined to the US domestic market. China's aviation is growing faster than the US market, so the signal is also clear. The COMAC/Airbus Beneficiary Question Airbus benefits asymmetrically — it has a final assembly line in Tianjin and existing deep relationships with Chinese carriers. However, Airbus also faces supply bottlenecks. COMAC's C919 is the wildcard, but its production capacity remains severely constrained, and its avionics and engines still depend on Western suppliers — some of which are now subject to US export controls. As we noted in an earlier analysis, Airbus' Tianjin FAL is struggling with LEAP deliveries. How this relates to COMAC's C919 isn't clear. Bottom Line The primary driver of the current rates is Section 122 of the Trade Act of 1974, which was invoked in late February 2026 as a "bridge" measure. Baseline Rate: A 10% ad valorem duty is currently in effect for most Chinese imports, including aerospace components and assemblies not covered by existing free trade agreements. Duration: These duties are temporary and scheduled to expire on July 24, 2026, unless extended by Congress or replaced by new investigations. Legal Shift: The US Supreme Court recently struck down the use of the International Emergency Economic Powers Act (IEEPA) for imposing tariffs. This invalidated several 2025-era "headline" tariffs, leading the administration to pivot toward Section 122 and pending Section 301 investigations. China’s response has historically targeted high-value US exports, specifically Boeing deliveries. Order Freezes: Throughout 2025 and into 2026, China has used "regulatory delays" and pauses on delivery certificates as a de facto tariff. Reciprocal Threats: China recently launched investigations into "US trade practices that disrupt global supply chains," which could lead to matching tariffs of 15–25% on US-origin aerospace technology and avionics by the second half of 2026. Given our work tracking delivery friction and inventory lag, these shifting "Section" authorities are likely the primary source of "noise" in our current data models, particularly regarding the 150-day window for Section 122 duties. And, perhaps, this is what was meant by a note from CFM regarding the Tianjin issue we noted above: "Root cause is temporary resource allocation issues across several entities involved in the delivery process."

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