Boeing is sitting tight, holding its breath and hoping its entire sales strategy for the China market isn’t about to unravel.
The company has assiduously courted the Trump Administration and offered blatant support for its policies. Now those policies on trade with China may bite it back.
Tariffs – the adding of compulsory taxes on imported goods, is aimed to prevent people buying them, and choose domestic alternatives. It never works and never has, causing even greater long term damage. The 1930’s and 1960’s proved conclusively that people don’t buy what they don’t want. They pay the higher price – often seen as prestigious – and they won’t buy ‘second rate’ domestic product when they know there’s better. The result is less of either gets sold.
China is about to retaliate as yet more tariffs are imposed on Chinese goods. When it adds 25% to the cost of every imported aircraft from Boeing, Airbus, who build in China, will simply take the lions share. Boeing will almost certainly loose existing orders.
Tariffs seem simple, even sensible, but they are genuinely a disaster long term, they cause trade to stagnate and everyone gets hurt the longer they continue. For Boeing they will slash its China sales, damage the aluminium and steel industry in the US who supply it – the very people it’s supposed to protect.
Boeing will loose sales, cut jobs, reduce its purchasing of US made materials, never mind components purchased in 50 other countries. Trade Wars spread like wildfire and recessions quickly follow.
The last thing the airline industry or the public needs is another recession. And don’t think your Gemini, Phoenix and other models won’t eventually be sucked in too! How happy will you be when the prices go up 25%?
For now China is taxing older 738’s on import and Gulfstream jets – but that’s the tip of an iceberg. The more America adds tariffs the more will be added in retaliation.