MONTREAL _ Bombardier Inc. is expected to face additional export duties on its CSeries commercial jet when the U.S. Department of Commerce announces preliminary anti-dumping duties later today.
The decision follows last week’s move to impose nearly 220 per cent preliminary countervailing tariffs once deliveries to Delta Air Lines begin next year.
The Montreal-based transportation manufacturer (TSX:BBD.B) has said it wouldn’t be shocked if the U.S. piles on by announcing another “absurd” duty.
Colin Bole, Bombardier’s sales chief for commercial aircraft, said the company expects the second duty to be a “significant number” but one that also makes no sense.
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 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 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 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.
The company has said the exorbitant duties are unfounded and the company is confident they will be reversed in final decisions in coming months. Bombardier says Boeing can’t justify its claim of being harmed since it doesn’t make a plane the size of the CS100.
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.