Boeing Confirms Chinese Airlines Rejecting Jet Deliveries amid Tariff Dispute

Boeing Co (BA.N) has confirmed that several of its Chinese clients are declining to accept delivery of new jets, citing retaliatory tariffs imposed by Beijing on US goods.

"Due to the tariffs, many of our customers in China have indicated that they will not take delivery," Boeing CEO Kelly Ortberg said during the company’s first-quarter earnings call on Wednesday.

Ortberg noted that China is the only country where Boeing is facing this issue and stated the company will reallocate new aircraft to other customers seeking earlier delivery amid a global supply shortage of commercial planes.

Commercial aircraft had been traded globally without tariffs since a 1979 civil aviation agreement, but that changed after the escalation of trade tensions between Washington and Beijing under US President Donald Trump's administration.

Chinese airlines now face steep import duties when accepting US-built planes. According to aviation consultancy IBA, a new 737 MAX is valued at around $55 million.

Two 737 MAX 8 jets ferried to China in March for Xiamen Airlines were returned to Boeing’s Seattle facility in the past week.

A third 737 MAX 8, originally intended for Air China (601111.SS), departed Boeing’s Zhoushan completion center near Shanghai on Thursday, en route to the US territory of Guam, according to data from AirNav Radar and Flightradar24.

That aircraft had been transported to China on April 5, shortly after Trump announced tariffs and before Beijing began enforcing its retaliatory measures.

Guam is a routine transit point for Boeing jets traveling the 5,000-mile journey between Seattle and Zhoushan, where the planes undergo final assembly and handover to Chinese customers.

The Chinese government has not publicly commented on the reason behind the aircraft returns.

Boeing’s Chief Financial Officer Brian West said China accounts for approximately 10% of the company’s commercial aircraft backlog.

The company had aimed to deliver around 50 jets to Chinese clients throughout the rest of the year, West said, adding that Boeing is now evaluating re-marketing options for 41 completed or in-progress aircraft.

"For the nine airplanes not yet in the production system, we're engaged with our customers to understand their intentions for taking delivery, and if necessary, we have the ability to assign those positions to other customers," Ortberg said.

"We're not going to continue to build aircraft for customers who will not take them," he added.

Tracking data from Aviation Flights Group shows 36 completed aircraft for Chinese clients currently located in the US, including the three jets that were recently returned.

Boeing data reveals there are 130 unfilled orders from China-based airlines and lessors, 96 of which are for the 737 MAX—the company’s top-selling model.

Industry sources suggest a significant number of Boeing’s more than 760 unallocated orders are also intended for Chinese customers.

The latest setback comes as Boeing continues its recovery from a nearly five-year halt in 737 MAX deliveries to China due to prior trade tensions and safety concerns.

West described the tariff issue as a short-term disruption and said Boeing would either resume deliveries to China or place the jets with other interested customers.

"Customers are calling, asking for additional airplanes," he noted.

Washington has signaled this week that it is open to reducing trade tensions with China, acknowledging that the current level of tariffs is unsustainable.

Still, analysts warn that shifting trade policies may keep many aircraft deliveries uncertain, with some airline executives suggesting they would prefer to delay receipt of new jets rather than pay high tariffs.