Sunday's disaster - following another fatal crash of a 737 MAX jet in Indonesia five months ago - has caused alarm in the global aviation industry and wiped billions of dollars off the market value of the world's biggest planemaker.
USA officials say the recent government shutdown played a part in the delay of Boeing's software update for its 737 Max aircraft, which has been grounded by airlines and countries around the world after two deadly accidents in the past five months, the Wall Street Journal reported.
While groundings of the Max probably wouldn't spur mass order cancellations, "this nevertheless spurs worries that the Max is flawed and could lose share to the Neo if customers, pilots and/or passengers sour on the aircraft", said Jonathan Raviv, an analyst at Citigroup Inc.
Ethiopia will ask European air-safety experts to analyse black boxes from a crashed Boeing jet in a sign United States authorities are not trusted to determine the cause of the disaster after ruling that the model is safe to fly. The FAA last grounded a major passenger aircraft in 2013, when it barred operators from flying Boeing 787s for more than three months because of a battery issue.
The decision will affect Air Canada and WestJet, which operate 24 and 13 of the 737 Max jets.
Ethiopian Airlines, which has four other 737 MAX 8 jets, has grounded them as a precaution.
Norwegian has cancelled U.S. flights from Edinburgh Airport after Boeing's 737 Max plane was banned from operating in the UK.
The pilots said they were able to recover quickly following the aggressive dive by disconnecting the autopilot.
Concern about the Max's safety seemed to be abating but returned on Sunday following the horror Ethiopian Airlines crash.
On Wednesday morning, Transport Canada issued a safety notice effective immediately grounding the Boeing 737 Max fleet from departing or arriving in Canadian airspace. The doomed plane was headed from the Ethiopian capital to Nairobi, Kenya, when it crashed six minutes after takeoff. The Maneuvering Characteristics Augmentation System, triggered by an erroneous sensor reading, had baffled pilots by pushing the Lion Air plane downward dozens of times before it crashed.
The MAX has a bigger and more efficient engine compared with earlier 737 models.
The president said he "didn't have to make this decision today", but concluded, "it's the right thing to do". That delivered a one-two punch for an aircraft type that has ranked among the world's safest since it started flying in the 1960s.
Trump said he had told American airlines about the decision as well as Boeing and all agreed with his administration's decision.
The new variant of the world's most-sold modern passenger aircraft was viewed as the likely workhorse for airlines for decades.
"We discussed the departure at length and I reviewed in my mind our automation setup and flight profile but can't think of any reason the aircraft would pitch nose down so aggressively", one pilot said.