SEATTLE/TOKYO (Reuters) – Japan’s ANA Holdings Inc said it would order 38 planes worth $4.33 billion from Boeing Co and Airbus, and buy a stake in Philippines Airlines parent PAL Holdings Inc to support its Asia growth strategy.

This confirms a Reuters report that Boeing was close to a deal to sell 737 MAX jets to ANA, and that Japan’s biggest carrier was also poised to order Airbus A320neos.

The order is the first in Japan for the newest version of Boeing’s best-selling 737 family and comes at a time when the country is facing pressure from U.S. President Donald Trump’s administration to cut its trade surplus with the United States.

ANA was also the first from Japan to pick Airbus’ narrowbody five years ago. The neo is a newer version of the A320 jet that is popular with Japanese low-cost airlines.

“The decision was based on the economic growth of Asia and emerging countries, with demand in the Asian aviation market and inbound demand on the rise,” ANA said of the fresh orders.

The airline, which saw its international revenue spike 11 percent in the December quarter versus a half percent rise at home, also announced an investment of $95 million for a 9.5 percent stake in PAL, saying it was confident in the Philippine market’s growth prospects.

ANA’s purchase of 20 737 MAX jets is worth $2.3 billion, while its order for 18 A320 neos is worth $1.99 billion, based on list prices, although airlines typically get large discounts.

ANA said it also had options for another 10 737 MAX jets.

Boeing and Airbus, top planemakers, have amassed thousands of orders for their narrowbody jets on significant fuel savings offered by a new generation of engines, but they continue to battle for global market share, with the U.S. firm chipping away at its European rival’s recent lead.

ANA’s narrowbody fleet, which will take the 737 MAX jets, is split between Airbus and Boeing and appears set to remain that way after the latest orders rather than transitioning to all-Airbus as older 737s are retired. Its budget offshoot Peach, which will take the A320neos, has an all-Airbus fleet.

However, Boeing dominates the count, at 81 percent as of end-March, among ANA aircraft with more than 100 seats.

ANA’s rival Japan Airlines Co. Ltd also operates a mostly Boeing fleet, giving the U.S. company its most dominant position in any major aviation market.

Around 80 percent of large jets used by Japanese carriers are Boeing planes, a Boeing spokesman in Tokyo said.

TRADE TENSIONS

The case for Japanese carriers buying Boeing has been aided by the fact that its aerospace firms such as Mitsubishi Heavy Industries, Kawasaki Heavy Industries and Subaru build major portions of Boeing’s aircraft, including the 787 Dreamliner’s carbon composite wings.

Japan has also resorted to major plane orders in the past to demonstrate a commitment to buying U.S. goods in the ebb and flow of trade frictions, and the latest deal for Boeing’s 737 MAX coincides with similar tensions now.

Washington and Tokyo are discussing a potential trade pact, with Japan under pressure to cut its trade surplus with the United States that stood at $56 billion in 2018, versus $69 billion in 2017.

Trump and other top U.S. officials have asserted that Tokyo unfairly ships millions of cars to North America while blocking imports of U.S. autos and farm products.

Japan says its markets for manufactured goods are open.

In September, Trump and Japanese Prime Minister Shinzo Abe agreed to start trade talks that appeared, temporarily at least, to protect Japanese automakers from further tariffs on their exports, which account for about two-thirds of Japan’s trade surplus with the United States.

Japan has insisted any pact would not be a wide-ranging free trade agreement, but U.S. Trade Representative Robert Lighthizer said last year he was aiming for a full free-trade deal requiring approval by Congress.

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