In a significant escalation of the US-China trade dispute, China has reportedly directed its airlines to suspend further deliveries of Boeing aircraft. The directive comes in response to tariffs imposed by former US President Donald Trump, which have raised duties on Chinese goods to as much as 145 percent. According to the Bloomberg report, people familiar with the matter said that Beijing has also instructed Chinese carriers to halt procurement of aircraft-related equipment and parts from American companies. These measures follow China’s announcement of retaliatory tariffs of 125 percent on US-made goods over the past weekend. The elevated levies have effectively rendered the purchase of US-made aircraft and parts impractical for Chinese carriers. Sources told Bloomberg that the Chinese government is also weighing support options for airlines leasing Boeing aircraft, as they grapple with mounting costs due to the trade tensions. Following the report, shares of Boeing dropped by as much as 4.6 percent in premarket trading. As of Monday, Boeing’s shares had already declined 10 percent since the beginning of the year. The ongoing standoff has placed Boeing, a major American aircraft manufacturer, at the centre of a rapidly evolving trade conflict between the world’s two largest economies. Bloomberg noted that the situation remains fluid, with prior instances of the Trump administration walking back on tariffs, such as those previously imposed on Apple iPhones imported from China. Currently, approximately 10 Boeing 737 Max aircraft are reportedly poised to join Chinese airline fleets, including two each for China Southern Airlines, Air China, and Xiamen Airlines, based on data from Aviation Flights Group. While some of these jets are stationed near Boeing’s manufacturing hub in Seattle, others are located at a completion facility in Zhoushan, eastern China. Bloomberg sources added that paperwork and payments for certain aircraft may have been finalised prior to China’s April 11 announcement of retaliatory tariffs, which came into effect on April 12. As such, these aircraft might still be allowed entry into China on a case-by-case basis. Additionally, Bloomberg reported last week that Juneyao Airlines has delayed delivery of a Boeing 787-9 Dreamliner that was initially scheduled for arrival in approximately three weeks. Boeing’s Compounding Woes The trade standoff presents another major setback for Boeing in the Chinese market, which is anticipated to account for 20 percent of global aircraft demand over the next two decades. Nearly a quarter of Boeing’s deliveries in 2018 were destined for China. However, the company has not announced a major Chinese order in recent years, hindered by trade disputes and internal challenges. China was the first country to ground the 737 Max aircraft in 2019 after two fatal crashes. Coupled with deteriorating trade ties under the Trump and Biden administrations, Chinese airlines have increasingly shifted preference towards Europe’s Airbus SE. Further compounding Boeing’s woes, a recent quality crisis occurred in January 2024, when a door plug on one of its aircraft blew out mid-flight. Despite its efforts to boost domestic manufacturing with the Comac C919, China remains dependent on foreign suppliers for meeting its growing air travel demands. Airbus currently plays a more significant role, but Chinese fleets continue to include hundreds of Boeing aircraft requiring ongoing maintenance and parts replacement. On Friday, China announced the imposition of a 125 percent tariff on all US goods effective April 12. This is part of the continued escalation that began with former President Trump’s tariff impositions aimed at narrowing America’s trade deficit. Including a 20 percent levy applied earlier this year in response to China’s alleged role in fentanyl trafficking, the total US tariffs on Chinese imports now amount to 145 percent. Boeing continues to hold several completed aircraft in inventory originally intended for Chinese customers. The manufacturer has warned that further trade escalations could impact supply chains that were already weakened by the COVID-19 pandemic and are only now beginning to stabilise. US Launches Probe Into Imports Of Computer Chips, Chip-Making Equipment, Pharmaceuticals Separately, the US Department of Commerce has launched investigations into imports of computer chips, chip-making equipment, and pharmaceuticals, under Section 232 of the Trade Expansion Act of 1962, which permits tariffs for national security reasons, news agency AP reported. These investigations aim to evaluate the risks posed by foreign reliance and whether domestic production can meet American demand. US President Trump has signalled intentions to introduce additional tariffs on pharmaceuticals, semiconductors, and automobiles, which, according to Commerce Secretary Howard Lutnick, “are not available for negotiation.” Lutnick stated in an interview with ABC News, “We need to make medicine in this country. We need to make semiconductors.” Trump affirmed the pharmaceutical tariff plan, saying, “Yeah, we’re going to be doing that,” adding that it would happen in the “not too distant future.” Over 70 percent of the active ingredients used in medicines manufactured in the US are imported, with India, the European Union, and China being the leading suppliers. While the US is a key player in semiconductor production, it remains heavily reliant on imports of advanced chips from Taiwan and South Korea. The International Trade Administration estimates that Taiwan alone accounts for 92 percent of global fabrication capacity for advanced logic chips. Despite investments by companies like Taiwan Semiconductor Manufacturing Co. in US manufacturing facilities—spurred in part by incentives from former US President Joe Biden’s administration—the overhaul of global supply chains remains a time-intensive and costly undertaking.