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Boeing hit by U.S.-China tariff war in boost to Airbus

UPDATED: Wed., April 4, 2018

A Boeing 737 MAX 7 appears on the tarmac before its first flight, Friday, March 16, 2018, in Renton, Wash. Tariffs proposed by China would affect some variants of Boeing’s 737 family of passenger jets. (Associated Press)
A Boeing 737 MAX 7 appears on the tarmac before its first flight, Friday, March 16, 2018, in Renton, Wash. Tariffs proposed by China would affect some variants of Boeing’s 737 family of passenger jets. (Associated Press)
Bloomberg

Boeing, the biggest U.S. exporter, suffered a setback in China after the country proposed an additional 25 percent tariff on U.S. aircraft in a retaliatory move, giving rival Airbus a leg-up in a market set to the become the world’s biggest.

In a tit-for-tat response to tariffs by President Donald Trump, China announced the levy on planes weighing between 33,070 pounds and 99,208 pounds, which would include some variants of Boeing’s 737 family of passenger jets. Single-aisle jets, dominated by the 737 and Airbus A320 series, are likely to account for 75 percent of the global market in 20 years, according to Boeing’s estimates.

China, poised to surpass the U.S. as the world’s biggest market for planes by as early as 2022, is crucial for the Chicago-based planemaker. More than 50 percent of the commercial jetliners operating in China are Boeing airplanes, with more than a quarter of its global delivery last year to the Asian giant. Boeing fell as much as 5.1 percent to $314.10 in early New York trading ahead of the U.S. market open. The shares, which closed Tuesday at $330.82, are up 12 percent this year.

Boeing and Airbus declined to comment on China’s decision.

Shares of Airbus, based in Toulouse, France, rose 0.5 percent to 94.08 euros as of 11:22 a.m. in Paris after China’s retaliation plan was made public.

China will be adding 921 million passengers by 2036, fueling demand for airplanes, according to the International Air Transport Association.

Last year, Boeing raised its 20-year forecast for aircraft demand in China as economic growth and an expanding middle class spur travel in the world’s most-populous nation. China will need 7,240 new planes valued at almost $1.1 trillion in the two decades through 2036, the planemaker said in September, raising it from an earlier forecast for 6,810 aircraft through 2035.

China also announced tariffs on other products such as soybeans and U.S.-built cars.

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