(Bloomberg) — China’s Juneyao Airlines Co. is delaying delivery of a Boeing Co. widebody aircraft, according to people familiar with the matter, highlighting how the escalating trade war between Washington and Beijing is driving up the price of big-ticket goods.
Juneyao was due to take delivery of the 787-9 Dreamliner, valued at about $120 million, from the US planemaker in about three weeks but will now hold off due to President Donald Trump’s tariffs on China, said the people, asking not to be identified discussing information that’s private. Beijing has instituted retaliatory tariffs on US-made goods.
Juneyao didn’t immediately respond to a request for comment. Boeing declined to comment.
Boeing shares fell in New York after Bloomberg News reported on the delivery delay. The stock declined as much as 2.3%, reversing earlier gains.
The Chinese airline joins a growing list of companies on both sides of the dispute suspending the exchange of goods due to the punishing levies. Tesla Inc. has stopped taking orders in China for Model S sedans and Model X sport utility vehicles — both of which are imported from the US.
The budding trade war represents the latest setback for Boeing in a market forecast to make up 20% of global aircraft demand over the next two decades. In 2018, nearly a quarter of the US planemaker’s output ended up in China, but it hasn’t announced a major order there for years.
Some of the issues have been self-inflicted — China was the first to ground the 737 Max in 2019 after two deadly crashes, and last year’s quality crisis following a door-panel expulsion slowed a recovery in delivery volumes. But trade tensions have been another recurring theme, and are heating up at a time when Boeing still has dozens of finished planes in inventory that were originally meant for Chinese customers.
Boeing has warned that an escalating trade spat could also hurt supply chains that had been severely strained ever since the pandemic and were only now showing signs of getting back to normal.
China announced on Friday that it will raise tariffs on all US goods to 125% starting April 12, after Trump imposed an equivalent charge designed to counter America’s trade deficit and punish Beijing for retaliating against US import taxes. On top of a 20% levy put in place earlier this year over China’s role in fentanyl trafficking, that means the rate of US tariffs on China is now 145%.
For Shanghai-based Juneyao, the postponement risks delaying its international expansion. The airline had planned to increase flights to Europe, including Brussels and Athens, from the summer. Those additional routes were reliant on deliveries of long-range Boeing aircraft.
Juneyao has a fleet of more than 100 planes, mainly Airbus SE single-aisle jets and nine Boeing 787s.
–With assistance from Julie Johnsson.
(Updates with background on Boeing’s relationship with China from fifth paragraph)
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