MONTREAL _ Bombardier Inc. faces whopping duties of almost 300 per cent to export its CSeries commercial jet into the American market after the U.S. Department of Commerce tacked on another 80 per cent of preliminary anti-dumping duties Friday.
The decision adds 79.82 per cent to 219.63 per cent in preliminary countervailing tariffs once deliveries to Delta Air Lines begin next year.
“The United States is committed to free, fair and reciprocal trade with Canada, but this is not our idea of a properly functioning trading relationship,” stated Commerce Secretary Wilbur Ross.
“We will continue to verify the accuracy of this decision, while (doing) everything in our power to stand up for American companies and their workers.”
The Montreal-based transportation manufacturer (TSX:BBD.B) didn’t immediately respond to the latest duty announcement, but last week said it was confident that the “absurd” and unfounded tariffs will be reversed in final decisions in the coming months.
It says Boeing can’t justify its claim of being harmed since it doesn’t make a plane the size of the CS100.
Boeing revised its request for anti-dumping duties to 143 per cent from around 80 per cent because of Bombardier’s refusal to provide certain information to the Commerce Department.
The Chicago-based aircraft giant said it welcomes the decision affirming its view that Bombardier sold the CSeries to Delta at prices below production cost to illegally grab market share in the single-aisle airplane market.
“This determination confirms that, as Boeing alleged in its petition, Bombardier dumped its aircraft into the U.S. market at absurdly low prices,” it said in a news release.
Boeing added that the duties are the result of Bombardier deliberately trying to violate trade law.
Countervailing duties target what the U.S. considers unfair subsidies, while anti-dumping tariffs go after the alleged selling of imported products below market value.
A Bombardier union said it wasn’t surprised by the new duty given the 48 per cent increase in the number of dumping allegations since the Trump administration took office.
“These tribunals are like the right arm of the large corporations of Boeing,” said Dave Chartrand, Quebec co-ordinator of the International Association of Machinists and Aerospace Workers.
He said workers will fight even harder to get the duty reversed.
“We will stand up and we will fight.”
The U.S. aerospace giant petitioned to the government in April after its smaller rival secured a deal for up to 125 of its CS100s with Delta in 2016. The firm order for 75 aircraft had a list price of US$5.6 billion, although large orders typically secure large discounts.
The department’s preliminary countervailing duty findings agreed with Boeing that Bombardier benefited from improper government subsidies, giving it an unfair advantage when selling its CSeries 100- to 150-seat jets south of the border.
Bombardier has repeatedly stressed that Americans will be hurt by the tariffs because more than half the content on the CSeries is sourced by U.S. suppliers, including Pratt & Whitney engines. The program is expected to generate more than US$30 billion in business over its life and support more than 22,700 American jobs in 19 states.
Bombardier is hoping the high duties won’t stand when the Department of Commerce announces its final ruling in December. The key decision likely won’t come, however, until the U.S. International Trade Commissions decides whether the Bombardier-Delta deal actually hurt Boeing’s business, a decision that’s not expected until early February.
A protracted battle could then ensue if either side appeals the case to the U.S. Court of International Trade, brings it before NAFTA dispute bodies, or even take the matter to the World Trade Organization.
Boeing’s complaint has prompted a heavy political reaction from the Canadian government and British Prime Minister Theresa May, who fears job losses at Bombardier’s wing assembly facility in Northern Ireland.
Canada has threatened to cancel the planned purchase of 18 Super Hornets to temporarily augment Canada’s aging fleet of CF-18s.
Prime Minister Justin Trudeau and May are appealing directly to U.S. President Donald Trump.