US Jet Tariff May Lead to a 'Trade War'

Canada, UK peeved by proposed 219% tariff on Bombardier jets
By Arden Dier,  Newser Staff
Posted Sep 28, 2017 7:52 AM CDT
US Jet Tariff May Lead to a 'Trade War'
A Bombardier C-Series jet sits in a Montreal hanger.   (Paul Chiasson/The Canadian Press via AP)

After a complaint from US aviation giant Boeing, the Department of Commerce has proposed slapping a 219% tariff on the import of C-Series jets from Canadian-owned Bombardier. The move—which still needs approval from the US International Trade Commission—would be in keeping with President Trump's goal of promoting US business. But it also "threatens to spark a trade war involving the US, Canada and the UK," reports the Financial Times. Already, Canada and the UK—where Bombardier employs 4,000 people at a factory in Northern Ireland, per the Telegraph—have hinted at a Boeing boycott. More:

  • Boeing's complaint: It argues unfair subsidies from Canada and the UK allowed Bombardier to sell its C-Series jets at below cost in the US, leading to a $5.6 billion contract with Delta. Bombardier says the complaint is "absurd" given that Boeing didn't even bid for the contract.
  • Bombardier should be scared: The tariff could sink the Delta deal, which represents 20% of C-Series sales so far, and keep the C-Series jets out of the world’s largest aircraft market. That's especially bad news for Bombardier as it’s facing more than $7 billion in debt and increased competition from Germany's Siemens AG, per Reuters.

  • Nothing personal: Boeing argues "this dispute has nothing to do with limiting innovation or competition" and "everything to do with maintaining a level playing field and ensuring that aerospace companies abide by trade agreements."
  • Er, maybe not: Bombardier's C-Series regional airliners with fuel-efficient engines will concern both Boeing and Airbus as they present "a threat to their duopoly in short-haul passenger jets," reports FT.
  • UK involvement: Arguing the tariff undermines Britain's relationship with Boeing, British Prime Minister Theresa May has blasted "protectionism creeping in around the world" despite it being one of the world's "failed ideologies," per the Guardian.
  • May will feel the pressure: She wants a free trade deal with the US after Brexit, but "a Prime Minister betting our economic future on a deregulated trade deal with the US might want to explain how 220% tariffs are going to boost our exports," says Labour leader Jeremy Corbyn.
  • US response: "Even our closest allies must play by the rules," Commerce Secretary Wilbur Ross says, per NPR, adding "the subsidization of goods by foreign governments is something that the Trump Administration takes very seriously."
(More Bombardier stories.)

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