America’s biggest exporter was already on the ropes. Then came tariffs

By Chris Isidore, CNN

(CNN) — Boeing’s problems the last six years have been legion. Tariffs could be yet another gut punch for the beleaguered company – and, given Boeing’s importance as the top US exporter, for the economy as a whole.

Boeing’s jets could get millions of dollars more expensive if other countries impose their own tariffs on US goods. And the US tariffs already in place could send the cost of building planes here soaring due the Boeing’s dependence on overseas suppliers.

That would come on top of safety and quality control failures that have led to fatal crashes and grounding of its jets, a strike that shut much of its production for two months late last year and plunging demand for planes during the Covid-19 pandemic.

The tariff battle is the last thing that Boeing needs right now, said Ron Epstein, an aerospace analyst with Bank of America, and the American aerospace industry is the last sector the Trump administration might want to punish.

“If you’re thinking about a manufacturing industry that is a net exporter, in a big way, why would you want to penalize it?” he said.

Alarm bells are already ringing over a possible US recession. Tariffs on aircraft and airplane components could hurt production at all manner of aerospace factories as well as their suppliers. That could help push the economy over the edge.

Despite its many problems, Boeing estimates that it supports 1.6 million jobs, directly and indirectly, including nearly 150,000 US employees of its own.

And beyond the direct economic impact, problems at Boeing and European rival Airbus could ripple across the entire global airline industry, with potential delays of new jet deliveries hurting hiring.

Boeing reports financial results for the first quarter early Wednesday, and its executives speak to investors later in the morning. Tariffs will almost certainly come up – although how deep an effect they will have remains to be seen.

China-bound planes forced to return

Perhaps the first sign of problems came over the weekend, when two planes at a Boeing facility in China were returned to the company’s Seattle facility rather than going to their Chinese customers. It’s still unclear who ordered the planes’ return, but Boeing’s Chinese customers are facing a 125% tariff on any US imports, which was retaliation for the US tariff of 145% on most Chinese imports. Boeing did not confirm the delivery problems, but it did not dispute the Reuters report about the return of the planes.

And that could be only the beginning of its trade problems.

China is the largest and fastest growing market for commercial jets. Boeing’s own recent analysis estimated that Chinese airlines are expected to purchase 8,830 new planes over the next 20 years, which represents 10% to 15% of global demand, according to Richard Aboulafia, managing director at AeroDynamic Advisory. But the trade tensions between America and China have already caused Boeing to lose ground in China to its European rival Airbus.

Chinese customers ordered 122 Boeing planes in 2017 and 2018. In the six years since then, that slumped to orders for only 28 planes, mostly for freighters or from Chinese leasing companies, which could be buying them on behalf of airlines outside China. Boeing has not reported a single order for a passenger jet from a Chinese airline since 2019.

And it’s not like Boeing can simply build planes at a different factory outside the US to circumvent tariffs. Boeing is the nation’s largest exporter, and unlike other multinational US companies, it doesn’t assemble any aircraft in any other country. What’s more, about 80% of its commercial jets end up in the hands of foreign airlines, Boeing CEO Kelly Ortberg said in recent congressional testimony.

“So free trade is very important to us,” he said. “It’s creating US jobs, long-term, high-value US jobs. So it’s important that we continue to have access to that market and that we don’t get in a situation where certain markets become closed to us.”

Boeing still has a massive backlog of orders from Chinese airlines – 195 planes, according to analysis from Epstein. It also has orders for 678 additional planes from unidentified airlines, most of which could also be from China, Epstein said.

The company can probably find alternative buyers even if its Chinese jet orders are canceled, given its multi-year global order backlog. But if other countries tariff American aircraft as well, that could be a harder sell.

So far only China has slapped retaliatory tariffs on US goods, but other countries could follow. Boeing, a major exporter, could then become a bargaining chip in the global trade war, even though it would also hurt international airlines in need of planes, said Epstein.

“Boeing is an easy target,” he said. Tariffing Boeing “is an obvious thing to do.”

Soaring building costs

But selling and delivering planes is only part of the problem for Boeing. Building them might become an issue, too, as it depends on foreign-made parts for about 80% its planes’ content, according to Ortberg’s recent congressional testimony.

The wings on the 787 Dreamliner, Boeing’s most valuable and expensive plane, come from Japan, for example.

The door plug that blew out, mid-air, from a 737 Max in January 2024 came from a supplier in Malaysia – though the problems were caused not by the supplier but by Boeing, which did not replace four bolts needed to keep the door plug in place.

Finding new American suppliers could be especially hard: Each new US part and supplier would need to be recertified by the Federal Aviation Administration, a process that can take more than a year all by itself.

That leaves foreign parts – and tariffs to pay, raising the cost of building an already $50 million to $100 million aircraft by millions more. It’s not clear any Boeing customer would be willing to foot that bill. Delta is already on record saying it will not pay tariffs on Airbus aircraft it has ordered that are assembled in Europe.

“Everyone is saying we don’t know who pays,” said Aboulafia.

Boeing certainly can’t afford to absorb the cost. It hasn’t reported a full-year profit since 2018, running up a combined $51 billion in operating losses since then. It is due to report another loss early Wednesday.

And suppliers are in even worse shape. Spirit AeroSystems, which Boeing is purchasing, has warned investors of “substantial doubt” about its ability to stay in business.

Another aerospace supplier, Howmet Aerospace, told customers it might not be able to live up to the terms of its contracts, according to a report by Reuters. Howmet cited “force majeure,” a legal term that allows parties to avoid their contractural obligations due to unavoidable external circumstances.

“That’s significant. If the force majeure argument holds up, and I don’t know why it wouldn’t, then everything would freeze up,” said Aboulafia.

The-CNN-Wire
™ & © 2025 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.