Despite the announcement of a de-escalation of Sino-American tariffs, Trump’s tour of the Middle East has been an attempt to woo Gulf state monarchies away from closer diplomatic and trade ties with China. His visit included the acceptance of a Qatari owned jet, replete with gold bathrooms and elaborate furnishings. However, Trump’s administration also used the Qatar visit to announce a deal between the Gulf state and US manufacturer Boeing worth $96 billion.
The agreement for the delivery of over 200 787 Dreamliner and 777X aircraft was hailed by Trump as historic and was followed by a deal with UAE carrier Etihad with Boeing worth $14.5 billion. This was subsequent to the news that an agreement on a UK US trade deal included British Airways’ parent IAG purchasing 32 Boeing 787 Dreamliners at a cost of $13 billion. Saudi Arabian aircraft lessor Avi Lease has also recently agreed an order for 30 Boeing jets, in keeping with the country’s push to become a major aviation hub in the coming decades.
The deals are part of the administration’s current efforts to quickly secure lucrative foreign investment and trade under Trump’s America First agenda. This includes a long-term strategy of decoupling from strategic necessities with China, and instead building trade and defense relationships with favored regional partners to strengthen US manufacturing.
Question marks however will be raised over whether Boeing can actually meet production targets necessary to deliver on these deals. As the US’s largest manufacturer with a former 40% global market share, Boeing has faced a series of intensifying crises over the last five years, some of which were self-inflicted. However, Boeing, like its market rivals, is acutely vulnerable to the problem of rising geopolitical risk. Now with Trump’s dyspeptic and unpredictable tariff strategy in full swing, geopolitical risk and instability will continue to blight the global aviation industry, facing rising tensions, not just between the US and China, but also the EU.
Recovery from the market and supply chain disruptions of the Covid pandemic did not reduce the industry’s vulnerability to global shocks driven by Sino-American rivalry. An increasingly combative relationship between the US and China has seen the global duopoly of Airbus and Boeing become proxies for EU-US strategic interests and geopolitical power plays in the South Pacific. This trend is set to intensify under Donald Trump’s second term as President.
During his first term, Trump aggressively supported Boeing’s long-running action against Airbus. In 2019, the World Trade Organisation’s ruling in favour of Boeing’s complaint against the EU’s unfair competition practices, saw Trump impose $7.5 billion of retaliatory tariffs, only for the EU to threaten to impose tariffs on the US. In the first year of Biden’s presidency, the US reversed course and agreed to set aside the tariffs for five years.
The geopolitics of the Boeing Airbus dispute is a prime example of the differing policy approach towards transatlantic relations of former president Biden and the current White House incumbent. Trump has long held the EU’s support and subsidies for Airbus’ development has inflicted serious harm on the US. Biden instead sought to diffuse the Airbus-Boeing dispute in the interests of rebuilding relations with the EU and NATO, as well as building a strategy to push back against China’s own ambitions for its aviation industry.
Following Trump’s Liberation Day announcement on tariffs, China placed retaliatory duties on imports of US goods including planes, and blocked Chinese aviation companies from importing Boeing’s aircraft. Boeing found several of its 737 MAX jets, intended for China’s Xiamen Airlines, forced to return to the US. The Chinese government began to soften its approach in late April and the trade agreement with the US saw the ban removed.
Boeing’s vulnerability to Trump’s tariffs was hugely obvious from the start and the company has been walking a tightrope geopolitically for the last eighteen months as the risk of a tariff war threatened to further impact its recovery and capacity to compete in China. Meanwhile, the visible interdependency of global aviation markets is no more apparent than in the effects Boeing’s problems have had on regional markets and industries heavily integrated into the company’s production chain.
Growth in South East Asian markets, above all China, has been driving the strategic agendas of Boeing and Airbus for years. Chinese demand is projected to account for 20% of the global market over the next two decades. For China, the absence of its own jet aircraft manufacturing has long been seen as a strategic vulnerability. Long dismissed as a serious competitor for Boeing or Airbus, the state-run manufacturer, Commercial Aircraft Corporation of China (COMAC) has aggressively pushed to catch-up with Airbus and Boeing in the domestic market. It has taken advantage of state subsidies far larger than the US or EU, and government mandated technology transfers from Western companies operating in China. COMAC is expanding internationally in South East Asia, but its domestic success alone is proving disruptive to the global aviation market, by squeezing Western market share.
Despite the positive publicity from Trump’s Gulf State deals, the Chinese market is too large and important for Boeing to de-couple from in the near future. But the willingness of the Chinese government to summarily cancel orders and return planes to the US, will add further pressure on Boeing to refocus its strategy for growth and resilience amid mounting geopolitical risk.
[Photo by Aldo Bidini (GFDL 1.2 or GFDL 1.2), via Wikimedia Commons]
The views and opinions expressed in this article are those of the author.
George Gallwey is a global affairs analyst with expertise in geopolitical intelligence, political economy, and public policy. He has degrees from Oxford and Cambridge and a PhD from Harvard University. He spent 2022-2024 as a Senior Analyst at the Bank of England working on global digital assets regulation.
