Boeing could fall victim to the escalating trade dispute between the US and China after Beijing announced a potential 25% tariff on US-made aircraft that would affect the 737NG narrowbody.

The Chinese Ministry of Commerce announced April 4 that it plans to impose this new tariff on $50 billion worth of US exports, including aircraft, soybeans and autos. The aircraft tariff would apply to narrowbodies weighing between 15 and 45 tonnes, which would include the 737NG but not the heavier 737MAX.

The announcement comes after the US announced a 25% tariff on some 1,300 Chinese products.

In 2017, Boeing delivered 202 aircraft to Chinese airlines, of which at least 100 were 737NGs.The number of 737NGs delivered to Chinese airlines account for about one-third of Boeing’s total annual production. 

Among the most recent 737 orders was a deal in March with China Southern subsidiary XiamenAir for 20 737-8s and 10 737-10s, worth $3.24 billion at list prices.

Boeing will stop production of 737NG next year and focus on CFM LEAP engine-powered 737 MAX production.

In a statement issued late Wednesday, Boeing said, "Boeing is confident that dialogue continues. While both governments have outlined positions that could do harm to the global aerospace industry, neither has yet imposed these drastic measures. We will continue in our own efforts to proactively engage both governments and build on the recent assurances by U.S. and Chinese leaders that productive talks are ongoing. A strong and vibrant aerospace industry is important to the economic prosperity and national security of both countries.

Industry analysts point out that while Chinese carriers could potentially shift 737NG aircraft purchases from the US manufacturer toward Airbus, Airbus’ order book is close to full, so switching to European aircraft will not be easy.

“Boeing will stop building 737 NGs in 2019-20, however, so it doesn’t matter if Chinese carriers don’t order them – they weren’t going to anyway,” JPMorgan analysts said. “Moreover, it is not clear whether the tariffs apply to aircraft already under order and if not, they shouldn’t really affect any NGs. Finally, with Chinese NG deliveries concentrated in 2018-19, there are no other options for Chinese carriers to get planes in this timeframe with Airbus sold out. In fact, Chinese carriers have likely been making pre-delivery payments on some of these 737 NGs already.”

As a result, “relatively few aircraft are actually affected by the proposed” Chinese tariffs, according to Vertical Research Partners. “Our analysis indicates that Chinese airlines only have 33 unfilled 787-800 orders compared to 246 unfilled MAX orders.”

Other analysts doubt whether Beijing will implement this new tariff, believing both countries will return to the negotiation table over the trade dispute begun by US President Donald Trump. Analysts also point out that And some analysts raised concerns that while the aircraft tariffs themselves, limited to the 737NG, might not unduly harm Boeing, a long trade war with China has the potential to trigger a global economic recession, which would hurt aircraft makers in general.

“The most important aspect of the tariffs will be the effect on the global economy,” Sanford C. Bernstein analysts noted. “The new tariffs on airplanes, soybeans, and automobiles add to others imposed [recently]. Should we see a global recession, this would be highly negative for Boeing and Airbus.”

The Chinese Ministry of Commerce did not state when its tariffs would go into effect.

In May 2017, Boeing broke ground on a 737 completion and delivery center in Zhoushan, China, which is scheduled to go into formal operation this year and be ready for aircraft delivery by the end of 2018. The delivery center is expected to deliver between eight and 10 aircraft each month.

Briefing reporters March 14 on the world market forecast for airliners, Boeing Commercial Airplanes VP-marketing Randy Tinseth said China was the largest market, with one out of every four Boeing airliners and one of out every three 737s going to China.

"This is a market where the economy is growing and aviation is an important part of that economy," he said. "Every aircraft we build has parts from China. It's intertwined and a mutual benefit for both of us to grow."

Michael Bruno contributed to this article.