Boeing emerges as a winner in Trump's trade wars

Observer

5 days ago

There typically aren't many winners in a trade war, but Boeing appears to be reaping some rewards from the one started by President Donald Trump.
The aerospace company has received a steady stream of new orders as part of trade deals between the United States and other countries. These sales could be a boon for Boeing as it emerges from years of bruising crises. They also allow Trump to claim that his unconventional trade policies are helping American manufacturing.
Orders for hundreds of Boeing jets have been announced in deals with Indonesia and Japan this month, as well as Bahrain, the United Arab Emirates, Saudi Arabia, and Qatar earlier in the year.
'Ever since his first term, his trade deals have generally involved these kinds of purchase agreements,' said Bruce Hirsh, a trade policy expert at Capitol Counsel, a lobbying firm in Washington that has clients in the aerospace industry. 'Our trading partners know this, so they're looking for these kinds of big-ticket items that they can offer to purchase.'
Some aviation analysts are skeptical that U.S. trade negotiators had to twist arms to persuade countries to buy Boeing planes. Airlines, including those controlled by foreign governments, plan such expensive purchases carefully and over months, if not years. Moreover, airlines have few choices, since Boeing and Airbus of France are the only two suppliers of large commercial jets.
Still, those experts said, it was not surprising that Trump and his aides have made a point of highlighting new Boeing orders as part of their trade deals. The company employs tens of thousands of Americans and is one of the country's top exporters.
Wall Street has also taken note of the announcement of new orders, and Boeing's share price has climbed steadily since early April, when Trump announced steep new tariffs on many countries.
Analysts note that the trade deal announcements could generate even more orders. That's because customers who haven't placed orders may feel pressure to buy planes now or risk having to wait when they need them. Planes ordered today will typically be delivered years from now.
Boeing, which declined to comment for this article, has seemed to welcome Trump's interest in its business. Boeing CEO Kelly Ortberg joined Trump on a May visit to the Middle East, during which the Qatar deal was announced.
'If the president of the country says, 'Come with me and be certain that we sign something big that says there will be many jobs in the U.S.,' what will you do?' said Adam Pilarski, president of Avitas, an aviation consulting firm.
However, Pilarski and other experts cautioned that the orders might not be nearly as substantial as they initially appeared.
The administration, other countries, and Boeing have offered few details about the deals, suggesting that at least some are still subject to complex negotiations between the manufacturer and airlines. This month, for example, Trump stated that Indonesia had agreed to purchase 50 Boeing jets. Later, however, an Indonesian official said the deal was still being hashed out between Garuda, a state-owned airline, and Boeing.
'I suspect these orders are, as we used to joke at air shows, MOUTHLs — memoranda of understanding to have lunch,' said Richard Aboulafia, a managing director at AeroDynamic Advisory, a consulting firm. 'The real hard work of contract negotiation and finance package negotiation takes place after the president's plane has left the country.'
Even if the orders are confirmed with formal contracts, many probably would have been placed even without Trump's intervention, experts said. In May, Qatar Airways, a large airline that operates many long-distance flights, placed an order for 150 of Boeing's wide-body planes. The announcement was notably thorough.
'They involved press conferences, shaking hands, everything but the proverbial kissing of the babies,' said Courtney Miller, managing director of Visual Approach Analytics, an aviation consulting firm. That deal, he said, probably would have been placed anyway, even if the timing had been accelerated to align with Trump's visit.
While some orders may be the result of real political pressure, even then, a lot can change by the time the planes are ready to be delivered. Boeing and Airbus each have thousands of planes on order, which will account for many years of production. In that time, airlines can back out of agreements, though they may have to forfeit deposits. Customers can also ask Boeing or Airbus to delay deliveries or reduce their orders. A manufacturer may be willing to make such changes, especially if doing so will allow it to sell those planes to another airline that is desperate for new jets.
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Before it can turn new orders into profits, Boeing has many pressing problems it still needs to address. The company is years behind securing regulatory approval for several important jets — the smallest and largest variants of the 737 Max and the 777-9, which started test flights for Federal Aviation Administration certification this month.
Another reason Trump's intervention may not be significant is that demand for planes has been strong for years. It's the supply of new planes that's limited.
Boeing, in particular is in catch-up mode. Its most popular plane, the 737 Max, was grounded for nearly two years after two fatal crashes. Then the pandemic fouled up supply chains. Last year, the company had to slow production at its factories after a panel blew off a plane during a flight. Last fall, a weekslong strike left Boeing woefully behind. Even Trump's trade war could take a toll.
The tariffs Trump has imposed may threaten the financial health of Boeing's suppliers, and the prospect of retaliation by U.S. trading partners, such as the European Union, could harm the plane maker's sales.
This week, the budget airline Ryanair announced that it would consider deferring deliveries of Boeing planes if European officials were to impose tariffs on American planes.
European leaders may take other steps that could hurt Boeing. If the trade deals that the United States strikes with other countries give Boeing too big an advantage, Europe could try to entice other countries to order more planes from Airbus, experts said.
'If this game is going to be played, the question is, in the long term, who plays it better?' Miller said. 'It has reopened a very old dynamic of aligning aircraft and airline economics with geopolitical favor.'
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