Aviation giant Boeing is readying itself for new tariffs stemming from the ongoing trade war between the US and China. However, the firm’s chief executive has admitted that there has been no material impact on its running costs just yet.
Speaking ahead of the Farnborough Airshow, Boeing’s chief executive Dennis Muilenburg addressed concerns that the American firm was preparing for increased costs within its supply chain.
“The discussion right now is proposed tariffs, ongoing discussions,” he said. “In terms of actual implementation and things that are impacting us, we haven’t seen a material impact yet.”
However, he admitted that “rhetoric about potential penalty actions are a concern to us.”
An escalating trade dispute between the US and China has already resulted in a 25 per cent tariff on $34bn (£25.7bn) of Chinese imports, and vice versa. In recent days, the US has threatened a further ten per cent tariff on $200bn of Chinese goods. Boeing has found itself at the centre of this dispute, as the aerospace sector makes up the largest single trade surplus item in the US economy.
Muilenburg added that the two countries “shared many interests” and reminded their leaders that the sector drove economic benefit globally.
“Aerospace thrives on global trade, free and open trade,” he said.
Boeing employs more than 140,000 people, most of whom are based in the US. It also happens to be the largest foreign customer of China's aviation manufacturing industry, and the company has forecast that China will become Boeing’s biggest customer within 20 years.
“We are very much engaged in the discussion,” Muilenburg said. “We are concerned that it could affect supply chain costs. But note that supply chains are flowing in both directions between (these) countries as we both support existing fleets as well as build new airplanes.”
Earlier this month, Boeing Commercial Airplanes chief executive Kevin McAllister said that the company would launch a new mid-market passenger jet by 2025. However, Muilenburg told reporters today that no decision would be made on this issue until 2019.