Al Root

Boeing stock dropped early Friday because President Donald Trump's tariff plan has consequences. China is punching back.

Shares of the jet maker were down 6.5% in Friday trading at $141.10, while the S&P 500 and Dow Jones Industrial Average were off 2.3% and 2.4%, respectively.

The plunge came after China announced retaliatory tariffs on the U.S. following Trump's Wednesday evening announcement of "reciprocal" tariffs on China. Trump's levies were much higher than expected, with "reciprocal" tariff rates adjusted for "currency manipulation and trade barriers."

The China-U.S. trade war is a big problem for Boeing. China is a huge market opportunity for the plane maker. Boeing projects mainland China air travel will grow by 5.2% annually, creating the world's largest market in terms of traffic. Demand growth creates the need for almost 9,000 new planes over the next 20 years.

Recently, Boeing and Airbus have roughly split the market for large commercial jets. Over time, China's COMAC will offer some new competition, but Boeing should deliver thousands of planes to China over the decades to come.

Now those planes are more expensive for Chinese buyers because of the tariffs, disadvantaging Boeing versus Airbus. Boeing only makes planes in America. It does have a finishing and delivery center in China.

Friday's stock drop came after Boeing shares fell more than 10% on Thursday in the aftermath of the initial tariff announcements.

"The aerospace industry is an export industry, and so a global trade war is most definitely a bad thing," wrote Vertical Research Partners analyst Rob Stallard on Thursday.

Boeing CEO Kelly Ortberg told Congress on Wednesday that free trade is important to the company. Some 20% of the parts in a jet come from outside the U.S., so tariffs raise costs. As a huge exporter, U.S. tariffs put Boeing in the crosshairs of nations looking to retaliate against the U.S.

According to the Census Bureau, the U.S. imported about $440 billion worth of goods from China in 2024 and exported about $145 billion worth of goods to China.

Write to Al Root at allen.root@dowjones.com

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April 04, 2025 10:01 ET (14:01 GMT)

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