Boeing Stock Plunges 3.53% Amid China Tariff Woes

On April 15, 2025, Boeing's stock experienced a 3.53% drop in pre-market trading.

Boeing is facing significant challenges in the Chinese market due to the imposition of high tariffs on U.S.-made aircraft. The increased costs have made it difficult for airlines to import and sell Boeing planes, although it is not entirely impossible. For instance, the Boeing 787's purchase cost has surged from $150 million to $340 million per aircraft, making it financially burdensome for airlines recovering from the pandemic. As a result, airlines are considering leasing options in the short term and may opt for Airbus or the domestically produced C919 in the long run.

However, there are specific scenarios where Boeing aircraft could still be imported and sold. For example, if aircraft were shipped before the tariff policy took effect on April 10, 2025, they would not be subject to the new tariffs. Additionally, if U.S.-China trade relations improve, Boeing could regain some market share in China.

Boeing's market sales have been severely impacted, with China once being a key market where 20% of new aircraft deliveries were made to Chinese customers. The high tariffs have led to a significant decrease in demand, with airlines like China Southern Airlines publicly auctioning off 10 Boeing 787 aircraft and accelerating the adoption of the C919. Existing orders worth $50 billion for 50 aircraft are now in jeopardy due to the tariffs, with the additional costs becoming a contentious issue between Boeing and its Chinese customers.

Boeing's financial situation is also under strain. The company may face revenue losses due to the inability to fulfill existing orders or the need to adjust prices. To maintain competitiveness in the Chinese market, Boeing might have to absorb part of the tariff costs or offer additional incentives, further increasing its financial burden.

In the space sector, Boeing is also dealing with layoffs and potential disruptions to its sixth-generation fighter jet project due to China's export restrictions on rare earth materials.

Despite these challenges, Boeing has secured a significant order from China's Bank of China Leasing, which has agreed to purchase 50 Boeing 737 MAX 8 aircraft. This order, along with previous ones, brings the total number of Boeing 737 MAX series aircraft to 215, with 139 still to be delivered. However, the safety record of the Boeing 737 MAX has been marred by two fatal crashes in 2018 and 2019, which have raised concerns about the aircraft's reliability and Boeing's ability to address these issues.

In contrast, the domestically produced C919 aircraft is gaining traction. The C919, China's first domestically developed narrow-body jetliner, has shown strong performance in terms of safety, fuel efficiency, and operational capabilities. With 12 customers and 156 aircraft in operation, the C919 has transported over 19 million passengers. The Chinese government is also supporting the development of the C919, with plans to increase production to 30 aircraft per year by 2026 and 200 aircraft per year by 2029. The C919's success is further bolstered by government policies that aim to increase the share of domestically produced aircraft in Chinese airlines' fleets to at least 30% by 2025.