Strategy

U.S. Hikes Tariffs on Bombardier Jets to 300%

The Commerce Department's decision in an antidumping case brought by Boeing "underscored the defensive trade policy" of President Donald Trump.
Matthew HellerOctober 6, 2017

In another high-stakes trade battle, the U.S. Commerce Department on Friday proposed increasing tariffs on Bombardier CSeries jets to 300% after determining that the Canadian firm sold the aircraft below cost to Delta Air Lines.

The department began an antidumping investigation of Bombardier in response to a petition from Boeing, which has complained its rival dumped the planes at “absurdly low” prices. The preliminary 79.82% tariff proposed Friday would add to a 220% tariff that Bombardier is already facing because of separate probe into Boeing’s claims it received unfair state subsidies from the U.K. and Canada.

“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,” Commerce Secretary Wilbur Ross said in a news release.

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“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,” he added.

As Reuters reports, the decision “underscored the defensive trade policy of U.S. President Donald Trump, and could effectively halt sales of Bombardier’s innovative new plane to U.S. airlines by quadrupling the cost of the jets imported to the United States.”

Earlier this week, the International Trade Commission bolstered that policy by finding U.S. washing machine makers have been harmed by rising imports from South Korea.

Bombardier was due to begin delivering a blockbuster order for up to 125 of the 100- to 150-seat planes to Delta next year. “The quadrupling of the price tag effectively kills all sales of the CSeries in the U.S.,” the Seattle Times said.

The CS300 model competes with Boeing’s current model 737-700 or the new version, the 737 MAX 7, which seats up to 172 passengers. Bombardier said Friday that offering discount pricing to big customers as a program is launched is standard in the aircraft industry.

“Boeing’s own … practices — selling aircraft below production costs for years after launching a program — would fail under Commerce’s approach,” the Canadian firm said. “This hypocrisy is appalling.”