The trade war between the US and China enters a new round as China immediately bans Chinese airlines from purchasing Boeing aircraft. The ban also includes the purchase of spare parts and accessories. The decision comes after Trump imposed a 145% tariff on Chinese goods. Following the tariff ping-pong between China and the US, China responds with the ban on the purchase of products from the aircraft manufacturer Boeing. The US products’ purchase for Chinese airlines has become unprofitable solely due to the punitive tariff. At a certain level of import tariff, it becomes irrelevant whether it is further increased as trade has come to a halt. The further escalations by Donald Trump are merely symbolic.
The Boeing stock plummeted after the announcement, further unsettling the company. The 737 MAX aircraft model has been in crisis due to technical flaws and Boeing is struggling with a loss of trust from both buyers and investors.
China had previously stopped the sale of rare earths, which are essential for the production of high-tech products such as LED, smartphones and electric motors. China accounts for around two-thirds of the global trade in rare earth metals and for some metals, China has a monopoly position, with a 100% share in global trade.
Donald Trump recently postponed the tariffs on smartphones and computers. The official goal of the trade war is to shift production back to the US. However, experts believe that this is merely a pretext. According to their view, Trump’s aim is to push investors into long-term US government bonds, which will lower interest rates and, in turn, reduce the burden on the US budget.