After Boeing submitted a complaint regarding Canadian aircraft producer Bombardier’s sale of its C Series jet to Delta last year, the Department of Commerce has preliminarily determined to add a 220 percent tariff to the cost of the aircraft.
The U.S. Department of Commerce has issued an affirmative preliminary determination in the countervailing duty (CVD) investigation of 100- to 150-seat large civil aircraft from Canada, finding that exporters of this merchandise received countervailable subsidies of 219.63 percent, the department said in a statement Tuesday.
As a result, Commerce will now instruct U.S. Customs and Border Protection (CBP) to collect cash deposits from importers of 100- to 150-seat large civil aircraft based on these preliminary rates.
Canada-based train and aircraft producer Bombardier Inc., however, says it “strongly” disagrees with Commerce’s preliminary decision on counterveiling duties.
“The magnitude of the proposed duty is absurd and divorced from the reality about the financing of multibillion-dollar aircraft programs,” Bombardier said of the preliminary CVD determination. “This result underscores what we have been saying for months: the U.S. trade laws were never intended to be used in this manner, and Boeing is seeking to use a skewed process to stifle competition and prevent U.S. airlines and their passengers from benefiting from the C Series.”
The Department of Commerce initiated a countervailing duty investigation against Bombardier on the behest of Boeing last year after the Canadian company sold 75 of its new C Series jet to Delta Air Lines.
In its complaint, Boeing alleged that “subsidies enabled Bombardier to dump its product into the U.S. market, harming aerospace workers in the United States and throughout Boeing’s global supply chain,” according to a report from the Wall Street Journal.
At the time of the sale, Delta said it was confident the U.S. would take no action against it, as “Boeing has no American-made product to offer because it canceled production of its only aircraft in this size range, the 717, more than 10 years ago,” according to WSJ.
However, the U.S. ruled in favor of that complaint from Boeing Co., and said it would add a 219.63 percent tariff to the cost of the new C Series jet. A final countervailing duty decision is expected by December, according to Commerce.
Canadian Foreign Minister Chrystia Freeland said that the government of Canada also strongly disagrees with the U.S. tariff ruling.
“This is clearly aimed at eliminating Bombardier’s C Series aircraft from the U.S. market,” Freeland told WSJ.
U.S. Secretary of Commerce Wilbur Ross, however, said in a statement that, “The U.S. values its relationships with Canada, but even our closest allies must play by the rules. The subsidization of goods by foreign governments is something that the Trump Administration takes very seriously, and we will continue to evaluate and verify the accuracy of this preliminary determination.”
According to Bombardier, its planes are more efficient, comfortable, quieter and therefore superior to competing aircraft.
“The C Series serves a market segment not supported by any U.S. manufacturer,” the company said. “Delta wants to bring this remarkable new aircraft to the U.S. flying public. Boeing wants to prevent U.S. passengers from realizing these benefits, irrespective of the harm that it would cause to the U.S. aerospace industry and the cost to airlines and consumers.
“There is wide consensus within the industry on this point, as well as a growing chorus of voices, including airlines, consumer groups, trade experts, and many others who have come forward to express grave concerns with Boeing’s attempt to force U.S. airlines to buy less efficient planes with configurations they do not want and economics that do not deliver value,” added Bombardier. “The U.S. government should reject Boeing’s attempt to unfairly tilt the playing field in its favor and to impose an indirect tax on the flying public through unjustified import tariffs.”
Commerce issues 220% tariff on Canadian jets
