Boeing Navigates Tariff Turbulence: Can the Planemaker Stay Aloft?

The U.S.-China trade war has taken flight into the skies, with Boeing at the center of a storm. Chinese airlines are rejecting deliveries of new jets due to retaliatory tariffs as high as 125%, while Boeing scrambles to reallocate planes to other markets and manage escalating costs. The company’s executives, however, remain bullish—arguing that strategic moves will soften the blow. Let’s unpack how Boeing is navigating this airspace of tariffs and uncertainty.

The Tariff Tsunami: Costs and Risks

Boeing’s CFO Brian West estimates annual tariff-related costs at less than $500 million, driven by duties on imported components from Japan and Italy. The company plans to offset some of this via a “duty drawback” program for exported jets, leveraging the fact that 70% of its planes are sold overseas. Yet the bigger threat looms from China: $1 billion in potential revenue is at risk as Beijing halts deliveries of 50 jets originally slated for 2025, including 30 737 Max planes for China Southern Airlines and 130 unfilled orders across models like the 787 for Xiamen Airlines.

The problem isn’t just lost sales—it’s stranded assets. When Xiamen Airlines rejected a 737 Max in early 2025, Boeing had to fly the jet back to Seattle from Zhoushan, highlighting the logistical and reputational hurdles. Analysts warn such disruptions could ripple through global delivery schedules, especially as tariffs remain in flux.

The Playbook: Reallocation, Production, and Politics

Boeing isn’t sitting idle. It’s aggressively reallocating jets originally bound for China to other markets. Air India, for instance, has already accepted 41 737 Max jets initially painted for Chinese carriers, with more deals in the pipeline. Bank of America’s Ron Epstein argues that strong global demand—particularly from India, the Middle East, and a constrained Airbus—gives Boeing an edge.

On the production front, Boeing is doubling down. It aims to boost 737 Max output from 30 to 38 planes monthly by mid-2025, with further increases to 52 per month pending FAA approval. The 787 Dreamliner line will ramp from 5 to 7 per month. CEO Kelly Ortberg sees this as a cash flow lifeline: higher production should turn Boeing’s cash burn into positive cash flow by year-end.

Politically, Boeing is leaning on Washington. Executives have lobbied the Trump administration to reduce China tariffs, and reports suggest the White House considered rolling back duties in April 2025. A tariff cut could unlock China’s market, though Beijing’s retaliation remains unpredictable.

The Bottom Line: Manageable Damage?

Boeing’s strategies appear to be buying time. The $500 million tariff hit is modest relative to its $80 billion annual revenue, and the $1 billion revenue risk is offset by reallocated jets and rising production. Crucially, 80% of Boeing’s supply chain is U.S.-based, shielding it from deeper tariff pain.

Yet risks persist. Supply chain bottlenecks could emerge as production scales—Ortberg admits “no weaknesses detected” but acknowledges close monitoring. A prolonged trade war or further tariff hikes could derail recovery. Still, the data leans bullish: Boeing’s order backlog remains robust at over 4,000 jets, and competitors like Airbus face their own struggles (e.g., A320 production delays).

Conclusion: Flying Through the Storm

Boeing isn’t out of the woods, but it’s not crashing either. The company’s ability to reallocate jets, ramp up production, and capitalize on global demand—while tariffs remain its primary headwind—suggests investors shouldn’t panic. The financial hit is manageable, and the long-term outlook hinges on whether Beijing and Washington can ground the tariff war.

For now, Boeing’s stock (BA) trades at 14x forward earnings, a discount to its 10-year average of 18x, reflecting market skepticism. But if production targets are met and China’s market reopens, this could be a buying opportunity. As Ortberg put it: “Everybody wants the aircraft.” In aviation, demand isn’t just a headwind—it’s the wind beneath Boeing’s wings.