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Boeing Is the Elephant in the Room in Trump’s Tariff War

Courtesy of Pam Martens

President Donald Trump Berates the Media in a Hastily Called Press Conference on February 16, 2017

President Donald Trump 

On January 20, 2017, the date of Donald Trump’s inauguration as President of the United States, the giant aerospace company, Boeing, closed the trading day at $159.53. Yesterday, it clocked in at $352.75 by the closing bell. The Trump era has added 122 percent to the pockets of Boeing shareholders, giving it a market cap of $207.6 billion.

Trump’s erratic reign had been good for Boeing – right up until Thursday, March 1, when Trump announced that he would be imposing 25 percent tariffs for foreign-made steel and 10 percent for aluminum. The stock market took a dive along with Boeing on the announcement.

Boeing is not just your average publicly-traded stock. It’s one of the 30 components in the Dow Jones Industrial Average, which is an index that affords greater weight to a stock based on its price. At yesterday’s closing price of $352.75, Boeing is by far the most expensive stock in the Dow. As such, it has a weighting of 9.76 percent of Dow performance. That compares with GE, the cheapest stock in the Dow, which registered a closing price of $14.42 yesterday and has a minuscule weighting of 0.40 percent in the Dow.

Trump has been a serial Tweeter about how his presidency has buoyed the Dow. Now, ironically, his steel and aluminum tariffs could be the undoing of that blissful relationship – in no small part because of Boeing’s precarious situation in the midst of a full blown trade war.

The problem isn’t that Boeing will see its aluminum costs for its planes rise dramatically. Morningstar analyst Chris Higgins notes the following in that regard:

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