Boeing investors are bracing for a perhaps turbulent ride as the full impact of former President Donald Trump’s trade war looms large.Concerns are mounting that the U.S. planemaker could face more significant headwinds than initially anticipated, notably after jets destined for a Chinese airline were returned to U.S.soil.

The Return of the 737 Max

Flight data indicates that a Boeing 737 Max 8, originally intended for a Chinese airline, was rerouted back to the U.S. from Boeing’s finishing center in China on Monday. This follows a similar incident on Sunday, where another 737 Max, adorned wiht the livery of China’s Xiamen Airlines, arrived at Boeing’s production hub in Seattle.

market Reaction and Industry-Wide Disruption

Boeing’s stock price experienced a nearly 3% dip on Monday, mirroring a broader sell-off across Wall Street. U.S. stock markets have been grappling with increased volatility this month, as investors attempt to decipher the ramifications of Trump’s tariffs. The aviation industry,in particular,has found itself caught in the crossfire of the trade war.

Trump’s tariffs, impacting goods from numerous countries, have triggered global disruptions. However, trade between the U.S. and China has been disproportionately affected, with levies reaching 145% on U.S. imports and 125% on goods heading in the opposite direction.

The Costly Reality of Tariffs

According to aviation consultancy IBA,a new 737 Max carries a market value of approximately $55 million (£41.4 million). The imposition of a 125% tariff renders the proposition economically unviable without a essential overhaul of the airline business model.

Adding to Boeing’s Woes

The return of these boeing jets underscores the vulnerability of the U.S.’s largest manufacturing exporter to the impact of tariffs. This progress compounds Boeing’s existing challenges, as the company strives to recover from a mid-air door panel incident in January 2024, which prompted a change in leadership.

Financial Outlook and Tariff Concerns

Kelly Ortberg, who assumed leadership of Boeing following the safety crisis, is scheduled to unveil the company’s first-quarter financial results on Wednesday. Analysts anticipate a significant enhancement in sales compared to the previous year, projecting a 20% increase in revenues to $19.8 billion. Though, losses are still expected to reach $466 million for the quarter.

Despite the anticipated sales growth, the results are likely to be overshadowed by concerns regarding the impact of tariffs on Boeing’s operations.

Analyst Insights

Douglas Harned, an analyst at Bernstein, anticipates uncertainty surrounding the tariff situation. He stated that he did not expect definitive answers on the tariff hit but was concerned that risks are larger than expected given airlines’ discomfort with paying tariffs, and possible delays to production to try to avoid levies.

Harned also suggested that the suspension of Chinese deliveries could negatively impact cash generation in 2025, even though he remains optimistic that the planes will eventually be delivered.

Navigating Uncertainty

Investors are grappling with considerable uncertainty regarding the White House’s intentions. Trump’s current policy involves raising tariffs on numerous countries following the conclusion of a 90-day “pause” on higher rates, which initially excluded China. This pause was implemented after market turmoil extended to the bond market.

Expert Opinions on Trade Policy

Richard Aboulafia, managing director of AeroDynamic Advisory, criticized the trump administration’s understanding of the aerospace industry, stating that it had showed a profound and hard-earned level of ignorance of how the aerospace industry works, and that long-term tariffs would be damaging for Boeing.

Aboulafia believes that the short-term impact on Boeing’s cash flow should be limited. Though, he emphasized the importance of Boeing pushing back against Trump’s tariffs, particularly to avoid a catastrophic trade war with the rest of the world.

The Stakes in the Chinese Market

Aboulafia emphasized the long-term meaning of the Chinese market, stating that in the long term it starts to matter. Chinese airlines are projected to account for as much as one-fifth of new aircraft sales, making it a crucial market for both Boeing and its European competitor, Airbus. You can’t just leave that to Airbus, Aboulafia cautioned.

Escalating Trade Tensions

In a sign that the trade war could extend beyond the U.S.-China relationship,Beijing issued a warning on Monday,stating that it would take resolute and reciprocal countermeasures against other countries negotiating with the U.S. if they reached agreements at China’s expense.

However, the global aviation industry may be less susceptible to countermeasures, given China’s reliance on U.S. and European aircraft.

Details of the Returned Aircraft

Reuters reported that the 737 Max 8 landed in Guam, a U.S. territory, on Monday, after departing from Boeing’s Zhoushan completion center near Shanghai, according to data from AirNav Radar.

A spokesperson for Xiamen Airlines confirmed to Reuters that two planes designated for the carrier had been rerouted to the U.S., but declined to provide a reason.

Boeing has been approached for comment.