China has reportedly ordered its airlines to immediately stop placing any new order for jets with American aerospace giant Boeing, as the trade war between the world's two biggest economies intensified over the weekend after President Donald Trump announced hefty tariffs of up to 145% on Chinese imports.
Chinese authorities have also strictly asked all domestic carriers to immediately stop buying all aircraft-related components from U.S. companies, Bloomberg News reported, citing sources familiar with the situation. The order from Beijing came as China, in retaliation, slapped a whopping 125% tariff on all American goods over the week—effectively doubling the price of all U.S.-manufactured aircraft and spare parts, Bloomberg reported.
Clipping the Wings
Boeing's stock lost 3% in premarket trading on Tuesday moments after Beijing ordered the suspension of all shipments to China—a country the aerospace behemoth still considers a major market with immense growth opportunity, despite the strong dominance of its competitor Airbus.
According to Bloomberg, the Chinese government has already started exploring avenues to support its domestic airlines that lease Boeing aircraft and are now grappling with high maintenance costs.
In a separate move, China also paused exports of rare earth metals and magnets earlier this month—materials that are integral to manufacturing a wide range of products from smartphones to military jets in the U.S.—as the trade conflict between the two countries continues to intensify.
On April 3, Beijing officially halted the export of at least seven varieties of heavy rare earth elements and magnets that are only processed in China, which has already raised concerns among several industries in the United States. Nearly 90% of the global supply of these rare metals is exclusively within the borders of China.
Trade War Escalates Further
These minerals, exclusively synthesized in China, are found in almost everything, especially in technology, electric vehicles, aircraft, and defense industries, said Drew Horn, who served as the leading U.S. official for strategic minerals and energy supply chains during Trump's first term.
Horn told The New York Post on Monday, "China has effectively built an all-powerful monopoly around these resources."
Although a ban on the export of these heavy rare earth minerals applies globally, elements like dysprosium and yttrium are especially vital to American industries, which could soon pose a problem for the manufacturers.
Horn noted that China has enough power "to basically cut us off and cut the world off, which essentially cuts us off through all sorts of different means."
He also stressed the need for protective measures to save American industries and their clients from possible Chinese retaliation. Citing Boeing as an example, Horn warned that Beijing "would basically go through the entire Boeing supply chain, throughout their entire ecosystem, and basically cut them off."
