Airbus vs Boeing: When Trade Threats Trump Product Quality

Not so long ago, we discussed what increasingly looked like Airbus’s dominance over its rival Boeing. The European aircraft manufacturer saw orders skyrocketing – for instance at the last Paris Air Show – while the American giant struggled with multiple setbacks, including the troubled 737 Max.

But that was before. Before the blackmail that America and its increasingly mob-like president are now trying to impose on the entire world…

Not necessarily a winning bet…

The Tariff Weapon

As we know, the United States has implemented its infamous tariff surcharges on virtually everything entering American soil from abroad. The stated goal? To address the trade deficit the US maintains with some of its partners – much to the dismay of those countries and especially their economies and businesses, which now face significant challenges from this shift.

In short, a complete upheaval of trade balances, and for the Trump administration, an opportunity to exercise blackmail: using these punitive tariffs as bargaining chips to extract commercial concessions in sectors where America appears to be struggling. Like aerospace, where Boeing could benefit from the windfall to boost sales that desperately need it.

Orders Are Flooding In

This seems to be playing out in recent orders the company has received. Between the massive $100 billion sale to Qatar a few months ago – complete with a new presidential plane as a gift (why hold back…) – to Japan and its airlines multiplying their Boeing wide-body purchases, South Korea, Saudi Arabia, and even Europeans like Poland or Germany with Lufthansa, which just ordered about a hundred Boeings worth several billion dollars that will transit through Switzerland via their subsidiary Swiss (conveniently reducing the US-Swiss trade deficit in the process) – the manufacturer’s order books are filling up at breakneck speed.

All this simply to please Washington and hope that Trump might someday be more lenient economically. Doormat politics, essentially – hardly glorious, especially for European countries that will later complain that Europe struggles to unite or that technically competitive products like the Airbus range aren’t selling as expected. Not surprising when you have a shopkeeper’s vision…

But Can They Deliver?

Fair enough – let Boeing orders pour in, with over 6,000 aircraft currently awaiting delivery (roughly matching Airbus), which should eventually roll out of assembly plants across the Atlantic. Except that while you can influence a product’s commercial success through blackmail or threats, those same tactics won’t necessarily work – or be sufficient – when it comes to actually manufacturing the product.

The customer risks waiting a long time for their order, or receiving something perhaps not as “high-performing” as they’d hoped. A reminder to some that cowardice doesn’t always pay as much as you’d think…