The news just got much worse for Boeing, even as the aircraft manufacturer continues to struggle over the 737 MAX issue.
As the trade war between the United States and People’s Republic of China continues to escalate, China’s next retaliatory move may be against Boeing. The warning was lodged by Hu Xijin, the Editor In Chief of the Global Times, a newspaper widely seen as a mouthpiece for the communist party.
China may stop purchasing US agricultural products and energy, reduce Boeing orders and restrict US service trade with China. Many Chinese scholars are discussing the possibility of dumping US Treasuries and how to do it specifically.
— Hu Xijin 胡锡进 (@HuXijin_GT) May 13, 2019
China accounts for 15% of global aviation market and is a huge (H-U-G-E) market for Boeing. Putting Boeing in the crosshairs of the trade war underscores what President Donald Trump’s Director of the National Economic Council Lawrence Kudlow told Fox News Sunday yesterday:
Chris Wallace: The Chinese may suffer consequences, but it’s U.S. businesses and U.S. consumers who pay, correct?
Kudlow: Yes, to some extent. I don’t disagree with that. Again, both sides … will suffer on this.
Boeing is still facing a publicity crisis and deeper credibility crisis over its handling of the 737 MAX program. As revelations emerge that Boeing likely cut safety concerns, it faces the “Pinto-ization” of its prized MAX program if it does not find a way to quickly contain the fallout.
China is too wise to “cut off its nose to spite its face” but it would not surprise me to see several Boeing deals cancelled to send a message to the United States.
I’m not an economist so I’ll leave it at that, but as an observer of the aviation world I do have to wonder how much it will cost American workers and companies to seek some semblance of “trade balance” when the PRC has a tremendous competitive-advantage in labor…