During the Sino-US Tariff War, a smart investor should put aside those emotional descriptions of who is kneeing down or who has surrendered and aim at facts and figures. Besides on equality of reciprocal tariff, we should know what they are going to do in these 90 days of ceasefire and what will be after that.
Boeing suddenly became one of the market focuses, besides Qatar royal family sent a B747 to Trump as Air Force One which is the largest gift of US president ever received, in China the business of Boeing is so dramatic. In mid-April, China banned the receive of Boeing planes because of tariff war. Altogether airlines in China had ordered 50 planes. Boeing has its factory in ZheJiang of east China, so those finished planes had to fly back to Seattle at once.
The demand of commercial planes is so great that even both Airbus and Boeing cannot fulfill the actual demand. So now altogether China gave up 41 planes among the 50. Other countries are keen to take over or else they have to wait for several years in the queue. But after the Swiss talk, there is a period of ceasefire for 90 days. The ban is lifted up, but some other countries already signed the agreement of taking over and some even started changing the interior logos. What should they do now?
Boeing asked for a penalty of US$10 billion for compensation of new buyers and their loss of prestige if China really want to take those planes back at once. It’s the only means that can solve the problem in order to be fair and just and give face to China. People may ask, China has their own C919 plane. However, they still cannot pass the security check no matter for US standard of EU standard and only passed by 7 countries now. Nowadays there are 14 airlines in China which have a fleet of 100% using Boeing planes and 2 airlines of 90%. Meanwhile, the parts and maintenance of Boeing is essential or else they cannot fly up to sky. C919 can only be used inside China and 7 other countries, cannot fly to EU and USA.
So what will happen 90 days later? Of course most people said should be cautiously optimistic, but don’t forget Donald Trump is a mad and crazy man. To say it clearly, it depends on the deal he is making with the rest 75 countries. Investors should keep an eye on those 75 countries. They are still on the way of talking. This is the most decisive point.