Boeing jets return from China as Trump’s tariffs escalate trade war

Boeing’s halted deliveries in China expose US companies’ deep reliance on Chinese markets amid rising tariffs.

A China United Airlines Boeing 737-800 prepares to land at Shanghai Pudong International Airport in Shanghai on April 16, 2025. Photo by Hector Retamal/AFP

By Anna Fadiah and Hayu Andini

The long-standing aviation relationship between China and the United States faced a sharp setback this week as Boeing jets return from China amid intensifying trade tensions. For the past seven years, Boeing had used Zhoushan airport near Shanghai as a key hub for completing and delivering aircraft to Chinese customers. However, the dark clouds of the ongoing trade war have forced changes no one expected.

On Monday, under the weight of escalating tariffs, a Boeing 737 was flown back to the United States, signaling a troubling shift in business dynamics between the two global powers. Boeing’s chief executive Kelly Ortberg confirmed that two planes already slated for delivery in China had been recalled, with a third aircraft soon to follow.

This unexpected move underlines how Donald Trump’s aggressive tariff policies are disrupting American businesses across vital international markets. For many US companies, the return of Boeing jets from China reflects broader anxieties about the stability of operations in one of the world’s most lucrative regions.

US companies face increasing vulnerabilities

Although Washington has long urged companies to diversify their global presence and "de-risk" reliance on Chinese supply chains, many American firms still maintain deep commercial ties to China. Boeing’s situation is far from isolated. Manufacturers, retailers, and technology giants all face mounting challenges as the trade environment worsens.

Isaac Stone Fish, chief executive of the New York-based Strategy Risks, noted, “It’s stunning how exposed US companies remain to China despite years of political warnings." His comments highlight the significant hurdles American firms now face in adapting to a more volatile international landscape.

The risks are not limited to tariffs. Beijing has shown that it is willing to retaliate in other ways. Authorities targeted PVH Group, the parent company of Calvin Klein and Tommy Hilfiger, citing concerns over alleged boycotts of Xinjiang cotton. This action marked the first time a prominent US company was added to China's "unreliable entity" list, a designation that can severely restrict a company's ability to trade and invest in China.

California-based biotech firm Illumina also found itself blacklisted as tensions continued to mount, underlining the potential risks for US businesses operating in China.

Walmart and Tesla navigate shifting waters

Retail giant Walmart, whose American parent company is one of the largest importers of Chinese goods, recently came under scrutiny in China. Authorities reportedly summoned executives over claims that the retailer pressured suppliers to cut prices in response to the growing tariff burden. Despite the pressure, Walmart’s China business remains robust, reporting a 23 percent year-on-year expansion in the most recent quarter.

Tesla, another US company with substantial exposure to China, faces its own set of challenges. Its Shanghai Gigafactory, responsible for over 40 percent of Tesla’s production, has benefited greatly from Chinese government subsidies, cheap financing, and tax breaks. Nevertheless, the shifting political landscape threatens the stability of Tesla’s operations.

China's dominance in the battery supply chain also poses risks to companies like Tesla, which relies heavily on Chinese battery cells for vehicles assembled in the United States.

Broader corporate exposure to China

Boeing jets returning from China are just the tip of the iceberg. Other major American companies like Colgate-Palmolive, Intel, and Philip Morris International maintain significant ties to the Chinese economy. For instance, Intel derived 29 percent of its 2023 revenues from China, while Colgate-Palmolive remains a large purchaser of Chinese-manufactured toothbrushes.

Despite efforts to reduce their dependence on Chinese materials, Colgate-Palmolive executives warned investors that new tariffs are projected to add $200 million to their costs this year, representing about 2.5 percent of their total goods sold.

Philip Morris’s chief financial officer, Emmanuel Babeau, however, struck a more optimistic tone, stating that the company does not foresee significant disruptions from the latest tariff moves.

Balancing act for US businesses

Even as tensions rise, many American companies remain committed to the Chinese market. Eric Zheng, president of the American Chamber of Commerce in Shanghai, noted that many businesses are pursuing a "China for China" strategy, emphasizing local production and sales rather than exports.

“Overall our companies are committed to the China market despite geopolitical tensions,” Zheng said, highlighting the enduring allure of China’s vast consumer base.

Although the Chinese economy has slowed due to a property sector slump, it continues to present significant opportunities. McDonald’s, for example, plans to more than double its number of outlets in China by 2028, from 5,500 last year to over 10,000.

Starbucks, too, has shown its resilience, opening 790 net new stores in China during the year ending last September. Meanwhile, Disney received government approvals this year to expand its Shanghai theme park, a project that was initially hailed as a symbol of Sino-American cooperation when it opened in 2016.

On the ground, life goes on

Despite the high-level political drama, the impact of the trade war on ordinary Chinese consumers appears limited for now. At Walmart’s Sam’s Club stores in Shanghai, customers continue to shop for essentials like milk and eggs without apparent concern for the geopolitical backdrop.

“For us ordinary people, daily life doesn’t have much to do with politics,” said one middle-aged shopper, illustrating the resilience of consumer behavior even amid broader economic uncertainty.

Boeing’s uncertain future in China

The case of Boeing remains emblematic of the sudden and unpredictable nature of trade tensions. Although Boeing still has around 50 deliveries scheduled for China this year, Ortberg admitted that the situation is fluid.

“We’re not going to continue to build aircraft for customers who will not take them,” Ortberg stated. He emphasized that Boeing has contingency plans, including redirecting jets to other customers eager for immediate delivery.

Nonetheless, the return of Boeing jets from China signals a serious disruption in what had once been one of Boeing’s most promising international markets. It also serves as a warning to other US companies that even well-established business relationships are vulnerable to the shifting sands of geopolitical conflict.

As Trump's tariffs reshape the global business environment, the future for US firms deeply entrenched in China remains uncertain — and potentially perilous.