U.S. Slaps 220% Duties on Bombardier’s C Series Jet after Boeing complaint

bombardier C-series

The U.S. imposed 220% duties on Bombardier Inc.’s marquee jetliner after Boeing Co.complained that the Canadian company received unfair government help.

Exporters of 100- to 150-seat Canadian aircraft received subsidies worth almost 220 percent, the Commerce Department said Tuesday in Washington. The U.S. will begin collecting preliminary duties to offset the public assistance, a move that would potentially upend Bombardier’s planned deliveries of its C Series jets to Delta Air Lines Inc. next year.

The decision comes after Boeing complained to the Commerce Department that Bombardier sold 75 C-Series jets, with an option to buy 50 more, to Delta Air Lines at an artificially low price and that it was able to do so because it was the beneficiary of unfair subsidies from the Canadian and Quebec governments.

Boeing had been asking for a countervailing duty of 80 per cent.

“The U.S. values its relationship with Canada, but even our closest allies must play by the rules,” Wilbur Ross, the U.S. Commerce Secretary, said in a release. “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.”

Another preliminary ruling, on anti-dumping duties, is expected to come next week.

The final ruling on both duties is expected in December, though appeals through both the U.S. judicial system and the World Trade Organization could take much longer. 

Delta won’t have to pay the duty until the planes are delivered, which is scheduled to begin next spring.

“We strongly disagree with the Commerce Department’s preliminary decision,” Bombardier said in a statement. “The magnitude of the proposed duty is absurd and divorced from the reality about the financing of multibillion-dollar aircraft programs.”

It claims that Boeing “is seeking to use a skewed process to stifle competition.”

In Quebec City Tuesday evening, the Quebec government swiftly denounced the ruling, describing it as “abusive and senseless,” and a full frontal attack on a key sector of Quebec’s economy

“We will fight the decision, no question about it,” said the minister responsible for the economy Dominique Anglade. “We will spare no effort to protect the interests of aerospace workers.”

Delta noted the decision is “preliminary” and said the real ruling will come early next year, when the International Trade Commission makes a final determination of whether any U.S. manufacturer will be harmed by imports of the plane. In June, the ITC made a preliminary ruling that Boeing’s commercial jet business may have been harmed by Bombardier. Delta agreed to buy at least 75 of the CS100 planes, the smaller C Series variant, last year.

“We are confident the USITC will conclude that no U.S. manufacturer is at risk because neither Boeing nor any other U.S. manufacturer makes any 100-110 seat aircraft that competes with the CS100,” the Atlanta-based airline said in a statement.

Delta has been preparing to take delivery of the CS100s in the spring, and was expected to allow pilots to bid on assignments to fly the plane in coming months. Those and other preparations will continue, Delta spokesman Morgan Durrant said.