U.S. imposes stiff tariffs on Canada's Bombardier

The US court's decision is expected this week

OTTAWA-Prime Minister Justin Trudeau has joined the chorus of condemnation over a US government decision to slap a 220 per cent duty on the sale of Bombardier jets, stating Wednesday that he's "disappointed" by the move and vowing to fight for Canadian jobs.

Theresa May has hit out at Boeing over the escalating United States trade dispute with Belfast-linked rival Bombardier, warning its behaviour was "no way to operate".

An interim tariff of 220% has been imposed on the import of Bombardier's C-Series jets to the U.S. after its competitor Boeing lodged a complaint that alleged the Canadian firm was receiving unfair state subsidies from the United Kingdom and Canada in order to win a major contract.

The US Department of Commerce proposed the 220% import tax on the jets, which could hit Bombardier jobs in Belfast.

The U.S. agency's decision was widely ridiculed by aerospace-industry experts, who said cutting prices to boost sales was a common practice.

But today's ruling does give Boeing momentum as the dispute drags on, and more leverage in any future talks between the Trudeau government and Boeing to reach a negotiated settlement.

With rail operations undersized and Boeing prompting the US jet penalties, Bombardier chief executive officer Alain Bellemare has fresh hurdles as he tries to turn around the company and end reliance on financial support from Quebec and Prime Minister Justin Trudeau's federal government.

"We believe the key area of concern will be what Delta does with its order", Walter Spracklin, an analyst at RBC Capital Markets, said in a note to clients.

Canadian Prime Minister Justin Trudeau threatened last week to call off a $5.2 billion purchase of 18 Boeing Super Hornet jet fighters from the USA unless the case was dropped. "Now that day could be a very long day, so that's where the risks come from".

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Delta past year agreed to buy 75 of Bombardier's new CS100 aircraft, with an option for as many as 50 more.

The case will now be considered by the US International Trade Commission for a final ruling in February.

It's not yet clear what avenue Canada will choose to focus on in its appeal, but if the initial ruling is upheld, the duties that make the jets more than three times as expensive would be due as soon as Bombardier starts delivering the jets to Delta, which isn't expected to happen until next spring.

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the US print edition of The Wall Street Journal (September 27, 2017).

The Atlanta-based airline agreed to buy at least 75 of the CS100 planes, the smaller CSeries variant. The deal was a major coup for Bombardier, which had struggled to sell its CSeries planes.

Boeing said that "subsidies enabled Bombardier to dump its product into the USA market, harming aerospace workers in the United States and throughout Boeing's global supply chain".

The list price for the planes is around $6 billion. But the actual amount of money involved in the deal has not been made public, and Boeing has alleged that it is much less.

Bombardier plunged the most in nearly two years after the US levied import duties on its priciest jet and the company missed out on a rail merger in Europe.

Would you like to support a project based right here in Quebec? The factory employs around 4,500 people. One of the authors moved to the region some years ago while the other was born and raised in Quebec.

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