China's Ban On Boeing Could Be 'Short-Lived,' But Trump Administration 'Can't Ignore' Trade Fallout, Warns Analyst

China’s ban on deliveries from Boeing Co. BA and a resultant halt of Chinese airlines purchasing airplane parts or equipment from U.S. companies is a serious matter for the Trump administration, says Bank of America.

What Happened: The ban has drawn the attention of President Donald Trump towards Boeing. The company’s significant role in China’s retaliation strategy has been highlighted by Bank of America (BofA) aerospace and defense analyst Ronald Epstein, Fortune reported.

Epstein stated that Boeing is the U.S.’s largest exporter and that they are not surprised by China’s move; however, they viewed the situation as ‘unsustainable.’ "When considering balances of trade, we think the Trump Administration can't ignore Boeing,” cautioned Epstein.

Boeing, one of the few remaining traditional U.S. manufacturers, heavily relies on exports, with about two-thirds of its orders coming from outside the U.S. The company’s CEO, Kelly Ortberg, has expressed opposition to tariffs, citing the importance of international business in providing U.S. jobs.

"We really are the ideal kind of an export company where we're outselling internationally….. it's important that we continue to have access to that market and that we don't get in a situation where certain markets become closed to us,” CEO Ortberg had said in a Senate hearing earlier in April.

Circum Aviation Analytics estimated that China would receive 29 aircraft from Boeing this year.

Why It Matters: This development comes at a time when Boeing and China were beginning to rebuild ties after years of limited business due to trade tensions and two fatal crashes. Despite setbacks, Boeing recently committed to expanding its Chinese fleet, aiming to more than double it to 9,740 aircraft by 2043.

China's move could benefit Airbus, its biggest single-country market and home to an assembly line in Tianjin, though limited production capacity may constrain gains, Epstein noted. He added that the Boeing ban might not be entirely negative: it could be ‘short-lived’ or lead Boeing to find new buyers. "Boeing should have no difficulty reallocating the aircraft to other airlines that need additional capacity," Epstein said. "We see India as a potential recipient."

Boeing Company stock dropped 2.39% to close at $155.52 on Tuesday. On a year-to-date basis, the stock lost over 9%.

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