Bombardier hit with new US jet duties in Boeing trade spat

Bloomberg

The US slapped duties on Bombardier Inc.’s showcase commercial jet for the second time in as many weeks, upholding Boeing Co.’s case that its Canadian competitor sold planes at less than fair value.
The Commerce Department imposed a preliminary import duty of 80 percent on Bombardier C Series aircraft based on its finding, according to an emailed statement. The agency ruled last week that the Montreal-based planemaker, which invested more than $6 billion to develop the all-new C Series, benefited from unfair subsidies.
The second round of import duties marks the latest blow for Bombardier, which received financial support from Quebec and Canada as its biggest jet came in two years late and about $2 billion over budget. The ruling is also bound to stoke tensions between the US and two key allies, Canada and the UK, which have expressed dismay with the Commerce Department.
Both charges—last week’s 220 percent countervailing duties and Friday’s anti-dumping restrictions—could be reversed by the US International Trade Commission if the tribunal concludes that Boeing wasn’t injured by Bombardier’s jet programme, a decision expected to be made next year. The Commerce Department also still needs to issue a final ruling in both cases.
Bombardier rose less than 1 percent to C$2.21 at the close in Toronto. The shares are 2.6 percent lower than their level before the initial Commerce Department ruling last week.
Canadian Foreign Affairs Minister Chrystia Freeland said she was “extremely disappointed” in the latest US decision, vowing to defend the country’s aerospace industry against “irresponsible and protectionist trade measures” that also hurt some US workers. “These anti-dumping duties on Bombardier’s C Series aircraft unfairly target Canada’s highly innovative aerospace sector and its more than 200,000 workers,” Freeland said in a statement. The measures also “put at risk the almost 23,000 US jobs that depend on Bombardier and its suppliers.”
The controversy is likely to hang over Prime Minister Justin Trudeau’s trip to Washington next week, where he is scheduled to discuss trade with President Donald Trump just as negotiators hold the fourth round of talks to amend the North American Free Trade Agreement. Trudeau has warned that his government won’t buy Boeing military jets unless the company drops the case.
British Prime Minister Theresa May said she was “bitterly disappointed” by last week’s decision, considering Bombardier employs more than 4,000 people in Northern Ireland. UK Trade Secretary Liam Fox and Irish Foreign Minister Simon Coveney have discussed the matter with US Commerce Secretary Wilbur Ross this week.
The US will begin collecting preliminary duties to offset the difference between the sales price and fair value, the Commerce Department said in its latest decision. The ruling applies to exports of 100- to 150-seat Canadian aircraft.
“This determination confirms that, as Boeing alleged in its petition, Bombardier dumped its aircraft into the US market at absurdly low prices,” the US planemaker said in an emailed statement. The C Series wouldn’t exist without the assistance of the Canadian and Quebec governments, according to Chicago-based Boeing. Delta Air Lines Inc. placed an order last year for at least 75 of the CS100 jets, the smaller C Series variant, in a deal with a list value of more than $5 billion. Deliveries are expected to begin next year.
The typical capacity of the CS100 ranges from 108 to 133 seats, according to Bombardier.