Bombardier hit with new U.S. tariff as trade row rumbles on


The U.S. Commerce Department last week slapped preliminary anti-subsidy duties of 220 percent on Bombardier's new jets, after a complaint from Boeing, which could effectively triple the price of the aircraft and shut it out of the U.S. market if upheld.

Boeing accuses its rival of receiving state subsidies from the Canadian and British governments, allowing it to sell aircraft in the U.S. for below cost price.

The duties are in response to a complaint from US competitor, Boeing, that accused Quebec-based Bombardier of selling 75 of its new CSeries jets to Delta Air Lines at below production cost to gain market share and that the government subsidized the project.

Bombardier pointed out that the CSeries 100- to 150-seat airline carrier, still to be manufactured to fill the Delta order, will be built with half of the parts coming from US suppliers.

Bombardier is hoping the high duties won't stand when the Department of Commerce announces its final ruling in December.

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 duty comes on top of a 219.63 percent duty announced last week for "countervailable subsidies" in financing the CSeries aircraft.

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.

"The company is very focused on expanding into Asia, as we see Asia, and India for sure, as the growth engines of the sector", said Francois Cognard, head of Asia Pacific sales at Bombardier, adding this would be its focus region irrespective of how a heated trade spat with larger rival Boeing Co pans out.

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Bombardier called the decision "an egregious overreach and misapplication of the US trade law".

"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", Ross said.

Bombardier can appeal the decision to a USA court or to a dispute-resolution panel created under the North American Free Trade Agreement (NAFTA).

The trade dispute threatening 4,200 jobs in Belfast intensified last night as the United States government hit Bombardier with a new punitive tariff.

Boeing applauded the decision in a statement, calling Bombardier's CSeries pricing "an illegal effort to grab market share in the USA single-aisle airplane market".

In retaliation, Canada and Britain threatened to avoid buying Boeing military equipment , saying the duties on the C Series would reduce U.S. sales.

The firm also took umbrage with Bombardier receiving $1bn (£765m) from the Canadian provincial government in Quebec in 2015, when its fortunes appeared to be flagging.

Bombardier shares were last up 0.5 percent to C$2.20.