Shares of Boeing (BA) dropped in morning trading amid speculation China may reduce orders amid the escalating trade war with the United States.
CHINA HIKES TARIFFS: China will hike tariffs on $60B worth of U.S. imports starting on June 1. The goods targeted include a broad range of agricultural products, The Guardian and other media sources said. The hike, which will impact about 5,000 products, comes after U.S. President Donald Trump raised tariffs on Chinese imports last week. China said in a statement that the U.S.' decision jeopardized the interests of both countries and does not meet the "general expectations of the international community," according to a Google translation.
Trump said via Twitter on Monday that China will be "hurt very badly if you don’t make a trade deal," noting that companies would be forced to leave the country without an agreement. Trump also said that China had a "great deal" almost completed but it "backed out."
IMPACT TO BOEING: Boeing could be impacted directly by China's retaliation against U.S. tariffs. Hu Xijin, editor-in-chief of the Global Times, said via Twitter that "China may stop purchasing US agricultural products and energy, reduce Boeing orders and restrict US service trade with China." The EIC added that "Many Chinese scholars are discussing the possibility of dumping US Treasuries and how to do it specifically."
In a statement from the company published on Twitter by CNBC's Carl Quintanilla, Boeing stated: "We're confident the US and China will continue trade discussions and come to an agreement than benefits both US and Chinese manufacturers and consumers."
ANALYST COMMENTARY: Boeing, as one of the top U.S. companies with revenue from China, could be put in a position of “retaliatory tariff risk," according to an analyst at Morgan Stanley, CNBC reported. Up to a third of Boeing’s orders for its core 737 aircraft are from China, according to Jefferies, CNBC added.
PRICE ACTION: In early trading, shares of Boeing are down nearly 3% to $344.78.
Boeing
-9.9 (-2.79%)
S&P 500
+ (+0.00%)