Trump Threatens Export Controls on Boeing Parts Amid China Tensions

On Friday, President Donald Trump warned that the U.S. could impose export controls on Boeing (BA.N) and open new restrictions on aircraft parts in response to China’s export restrictions on rare minerals.

Since taking office in January, Trump has frequently used Boeing in his aggressive efforts to reshape global trade. During past trade tensions, Beijing temporarily halted deliveries of new Boeing jets to Chinese airlines in April. Despite this, Boeing secured several major sales to foreign carriers following Trump’s visits.

Asked by reporters at the White House which items could face export controls, Trump said, “We have many things, and one big thing is airplanes. They (China) have a lot of Boeing jets, and they need the parts and many other things.”

Bloomberg reported in August that Boeing was negotiating the sale of 500 jets to China. If finalized, this would mark the U.S. manufacturer’s first major Chinese order since Trump’s previous term.

Scott Hamilton, an aerospace analyst at Leeham Company, said even if the deal does not go through, Boeing would face minimal financial loss, calling it “like sandpaper on Boeing’s hide.”

Historically, China accounted for up to 25% of Boeing’s order book, but today that share is less than 5%. According to aviation analytics firm Cirium, Chinese airlines have at least 222 Boeing jet orders, with 1,855 Boeing planes currently in service in the country. Most of the ordered and active jets are Boeing’s popular 737 single-aisle models.

Restrictions on spare parts or exports would also impact CFM International, a joint venture between GE Aerospace (GE.N) and France’s Safran, which produces LEAP engines for the 737 MAX. It also manufactures engines for the GE 777 and 787, two major jets ordered by China.

Cirium notes that Boeing’s European rival, Airbus, has received only 185 orders from Chinese customers. Airbus operates a production center in Tianjin, assembling roughly four single-aisle A320 jets per month.

China is pushing to accelerate its commercial jetliner industry, primarily with the COMAC C919, a competitor to the A320 and 737. Cirium reports that Chinese customers have placed 365 orders for the domestically produced jet.

However, U.S. export controls on parts supplied by Western countries have significantly slowed C919 production. By September, COMAC had delivered only five of the 32 jets expected by Chinese customers this year.