How do you get a country excited about paying 30% extra? Tell them it’s a discount from paying 145% extra.

It’d be funny if it weren’t so tragic.

The recent 90-day trade almost-ceasefire between the United States and China has been announced, clipping tariffs on inbound goods to the U.S. from 145% to 30%. Put another way, the effective embargo with one of the U.S.’s largest trading partners has been converted into an economically challenging tariff.

And the crowd went wild.

Markets rose over 3% on the news. The combination of an announcement of a future trade deal with the U.K. and the 90-day lowering of tariffs on imports from China has been viewed incredibly positively by U.S. markets.

As for us, we remain skeptical. Not pessimistic, per se, but skeptical. While we may have removed the uncertainty around 145% tariffs, we have gained the certainty of 30% tariffs.

During any other time, 30% tariffs would have sounded economic alarm bells. Warnings of stagflation, reduced company earnings, unemployment concerns, you know, the works. Today, however, it’s simply been euphoria that it’s not 145%.

Which brings us back to aviation - that industry on which we all rely to connect global economies. What does this mean for aviation?

It’s not great, but also not what you think.

We’ve been meeting with research subscribers this week in Tokyo, discussing the details of the tariffs, where the risk and impacts lie. In short, we don’t think tariffs are a major cost for aviation. The cost impact of tariffs on aviation is quite minimal, actually. It’s the impact on demand that is more concerning.

But back to that U.K. deal. As a part of the deal, it was announced that the U.K. would purchase $10 billion worth of aircraft from Boeing. IAG soon announced an order for 32 787-10 aircraft and six 777-9s. Just yesterday, Qatar announced a deal for 130 787s and 30 777-9s. What impressive wins for Boeing, right?

Actually, yes. These are big wins for Boeing - but they had nothing to do with the trade deal. Airlines don’t just pick airplanes off the shelf within a day of a rushed trade deal. These deals had been in the works and rumored for many months. Boeing won these deals on their own merits - creating the opportunities for a political photo session. Frankly, we don’t care. Good for Boeing.

(Relevant side note: IAG announced an order for 21 Airbus aircraft on the same day.)

Yet, while the U.K. trade deal likely had nothing to do with Boeing’s win, China may be a different matter altogether.

China needs airplanes. New capacity into the country is down 75% from the 2018 peak prior to the MAX grounding.

At the same time, the U.S. government is using trade balances as a way to measure success in trade agreements. Boeing remains the U.S.’s largest exporter.

See where we’re going here? China needs airplanes. Boeing makes airplanes. The U.S. wants a political win on exports. Boeing is the easiest way to offset some trade imbalance in big chunks.

We believe Boeing is in a prime position to walk away as the big winner in a long-term trade deal with China. That doesn’t mean a deal is done or imminent, rather that the stage is set in favor of Boeing. Perhaps the more accurate description is that the political stage was set against Boeing with China over the past eight years, and it could be about to go away.

Either way, 2025 could be the year of the Boeing.

Our latest research

You should do a chart on…

We like to create valuable charts. But, it’s not easy coming up with new ideas amid the endless hours delivering data-driven edge to our customers. In our quest to provide a valuable weekly newsletter we can keep guessing what you find most valuable, or you could just tell us.

If you have an idea for data visualization, reply to this email and let us know what analysis you’d find most valuable. We’d love to hear from you and will happily name-drop.

If you were forwarded this email, score!

As valuable as it is, don't worry; it's entirely free. If you would like to receive analyses like this regularly, subscribe below.

Then...

You can pay it forward by sending it to your colleagues. They gain valuable insights, and you get credit for finding new ideas!

Win-win!

Subscribe here