The U.S. Commerce Department stunned both sides by imposing a tariff of 219 percent on every CSeries airplane that’s sold to a U.S. airline. The ruling is likely to exacerbate already-tense trade relations between the U.S. and Canada.
The U.S. Commerce Department sided with Boeing on Tuesday in the jetmaker’s tense trade dispute with Bombardier, imposing a massive tariff that would more than triple the price of Bombardier’s CSeries jets sold to American airlines and could further erode relations between the U.S. and Canada.
Commerce slapped a 219 percent tariff on the planes after concluding that Bombardier’s crucial CSeries sale to Delta Air Lines last year was supported by subsidies from the governments of Canada and the U.K.
“The U.S. values its relationships with Canada, but even our closest allies must play by the rules,” Commerce Secretary Wilbur Ross said in a statement. “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.”
A decision in favor of Boeing was widely expected, but the size of the tariff imposed on Bombardier — 219.63 percent, to be precise — shocked all sides, especially the Canadians.
Mike Nadolski, Bombardier’s vice president of communications, called the amount “absurd and divorced from the reality about the financing of multibillion-dollar aircraft programs.”
In its petition, Boeing had asked for a 79 percent tariff because of the subsidies.
It’s unclear how Commerce arrived at the much higher figure. A fact sheet released with the decision says only that it used the “reported information” presented by Bombardier and the governments of Canada, Quebec and the United Kingdom.
If this tariff is applied to the price Delta paid, which is not publicly known but is estimated at around $25 million to $30 million per airplane, it would pump the price of each jet up to around the list price of $79.5 million.
But in the aviation world, no buyer ever pays list prices. Discounts of 50 percent are standard for large orders. And for a high-profile launch order like the Delta purchase, even bigger discounts are typical.
The ruling threatens to spark a trade war with Canada, where the aircraft is assembled in Montreal, Quebec. It will also draw in the British government because the CSeries wings are built in Belfast,…