(Reuters) The Trump administration has recommended steep anti-subsidy duties on Bombardier’s C-Series jets, setting up the next round of a fierce international trade dispute between the US and Canada.
The US Commerce Department has confirmed the imposition of duties of 292% stems following a complaint by Boeing that Bombardier had been illegally subsidised by the Canadian government.
The move could hit jobs at Bombardier’s plant in Northern Ireland, where the wings for the C-Series are made.
Boeing has claimed that a deal by Bombardier with Delta Air allowed the plane-maker to dump its newest jetliner in the US market at below cost.
Both Bombardier's and Boeing's share prices were down on Friday, on the back of concern that Boeing's actions may rebound on the company in the marketplace – although Bombardier's was showing signs of recovery.
“Today’s decision validates Boeing’s complaints regarding Bombardier’s pricing in the United States, pricing that has harmed our workforce and US industry,” Boeing said in a statement on the decision, which was generally expected within the aerospace industry.
Duties would triple cost of plane
Delta Air, the second largest US carrier by passenger traffic, has an order for 75 of the 100-to-150 seat C-Series jets.
The aircraft starts at $79.5m, according to list prices, or some $5.9bn for the total order, but carriers typically receive steep discounts.
If confirmed, the duties would more than triple the cost of a C-Series aircraft sold in the US, based on Boeing’s assertion that Delta received the planes for $20m each, well below an estimated cost of $33m and what Bombardier charges in Canada.
The US penalty against Bombardier will only take effect if the lesser-known US International Trade Commission (ITC) rules in Boeing’s favour, as it has so far, with its final decision expected in early 2018.
Bombardier criticised the US decision as out of touch, citing the Canadian planemaker’s plan to team up with Airbus to launch assembly of the C-Series from a production line in Mobile, Alabama, making it a domestic product for US buyers.