Al Root

Boeing stock soared on Wednesday after President Donald Trump paused his "reciprocal" tariffs on non-retaliating countries for 90 days.

It's a relief for Boeing investors worried that the jet maker was caught in tariff retaliation crosshairs.

Boeing stock was up 11.7% in midday trading at $155.88, while the S&P 500 and Dow Jones Industrial Average were up 7.5% and 6.6%, respectively.

"I have authorized a 90-day PAUSE, and a substantially lowered Reciprocal Tariff rate during this period or 10%, also effect immediately," wrote the president on Truth Social. He increased tariffs on China because that nation raised tariffs on U.S. imports.

Trump's tariffs are intended to help reduce or eliminate America's trade deficit. Boeing is a big exporter, and exporting more is one way out of the deficit. The problem? It is going to be much harder to sell to foreign countries now because of the Trump tariffs.

Wednesday, Jefferies analyst Sheila Kahyaoglu reviewed U.S. trade statistics and how America's commercial aerospace industry fits into the puzzle.

The annual trade deficit is approaching $1 trillion, based on roughly $4 trillion of imports and $3 trillion of exports. That $1 trillion imbalance compares with total economic output of about $30 trillion.

Aircraft exports helped the trade balance. They amounted to about $124 billion. Imports -- U.S. airlines buy France-based Airbus planes, too -- totaled about $62 billion. Including services, net exports, or the trade balance, for the U.S. commercial aerospace industry amounts to about $100 billion annually, Kahyaoglu said.

China, Mexico, and Vietnam account for roughly $600 billion. Major European Union countries, including France, Germany, and Ireland, account for another $200 billion.

Boeing has a $350 billion international backlog. Only about $70 billion is destined for China, Mexico, Vietnam, and the major EU buyers. That amounts to about 1,000 planes.

Reducing the annual trade deficit by about 4% to 5% would require those countries to buy about 500 more planes each year.

Kahyaoglu's point isn't that erasing the trade deficit with Boeing exports is impossible. It illustrates that commitments to Boeing can be a negotiating chip in the escalating trade war. Foreign countries that commit to buying more Boeing jets might help Trump back off his most punitive tariff rates.

The problem for Boeing right now is that the price for a Boeing jet in China went from an average of about $70 million to $130 million after China announced import tariffs on American goods of 84%. That's an incredible advantage for Airbus.

China isn't part of the Trump 90-day pause because of the levies it has implemented on U.S. goods.

Boeing hasn't reported consistent profits since the 737 MAX was grounded worldwide in 2019 after two deadly crashes in a span of five months. In 2018, Boeing made an operating profit of about $10 million a plane. It simply can't absorb high tariff rates into its cost structure.

Those tariffs could result in order cancellations. Investors can look for an update about tariff impacts on Boeing when it reports first-quarter earnings on April 23. Boeing delivered 130 jets in the first quarter, up from 83 in the first quarter of 2024.

Boeing faces a lot of uncertainty right now. Implicitly, Kahyaoglu believes things will turn out fine. She rates Boeing stock Buy. Her price target is $220 a share.

Coming into Wednesday trading, shares were down about 17% since Trump's April 2 "Liberation Day" tariff announcement.

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

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April 09, 2025 14:07 ET (18:07 GMT)

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