NEW YORK—(BUSINESS WIRE)—Revised trade policies emerging from a new US administration could hamper the competitiveness of North American commercial aerospace companies, especially Boeing, one of the country’s largest exporters, according to Fitch Ratings.

Trade with China is particularly relevant. China drives much of the growth in the commercial aircraft market, and Fitch estimates the country will be the destination for 20% or more of Boeing’s commercial aircraft deliveries in 2016. China has become a key battleground for Airbus and Boeing, and relatively restrictive trade policies with the country could put Boeing and other US-based aerospace companies at a disadvantage.

More restrictive trade policies could also disrupt the global aerospace supply chain including within North America. Mexico has experienced significant growth in commercial aerospace business in the past decade, and now serves as a key supplier location. Canada’s aerospace sector, including leader Bombardier, could be affected by a revised NAFTA with the aircraft builder maintaining operations in all three NAFTA countries.

The future of the US Export-Import Bank (Ex-Im) is another potentially key development, as its survival is less certain with the new Congress. Shutting the Ex-Im bank could negatively affect the competitiveness of US-based aerospace manufacturers, particularly during times of credit market stress, unless similar actions occur for export credit agencies in the home countries of other global aerospace companies. Ex-Im elimination would raise the level of urgency in the aircraft finance community to develop other insurance-backed financing vehicles to fill the gap left by Ex-Im. The bank supported 27% to 30% of Boeing’s aircraft deliveries during the credit crisis from 2009 to 2012.

Additional information is available on www.fitchratings.com.

The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.

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