U.S. escalates trade dispute with Canada in new tariff decision
The Commerce Department moved Friday to impose an 80 percent tariff on Canadian jetliners, siding with U.S. manufacturer Boeing in a case that alleges Canadian jetmaker Bombardier is selling jets in the United States at unfairly low prices. The move comes on top of a separate preliminary 219 percent tariff decision announced last week.
If both decisions are confirmed by the U.S. International Trade Commission, a quasi-independent government agency that has the final say in such disputes, they would quadruple the price of certain Canadian jets sold in the United States, effectively shutting Bombardier out of the U.S. market. The commission’s final ruling is expected in February.
Commerce Secretary Wilbur Ross described Friday’s decision as an effort to level the playing field on trade with Canada.
“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 in a statement. “We will continue to verify the accuracy of this decision while [doing] everything in our power to stand up for American companies and their workers.”
Boeing heralded Friday’s decision as a long-awaited move to curtail alleged “dumping” by Bombardier, a term in international trade law that refers to selling a product abroad at an artificially low price.
“These duties are the consequence of a conscious decision by Bombardier to violate trade law and dump their C Series aircraft to secure a sale,” Boeing said in its statement. “This dumping in our home market was not a situation Boeing could ignore, and we’re now simply asking for laws already on the books to be enforced.”
Bombardier described the decision as an “egregious overreach and misapplication of U.S. trade laws” in a statement issued Friday. The company also criticized the Commerce Department’s handling of the issue, saying it has “completely ignored aerospace industry realities” in calculating tariff margins.
The decision is yet another blow in an escalating trade dispute between the United States and Canada.
President Trump has criticized Canada for its pricing practices on certain dairy products from the United States, calling the country’s trade posture “a disgrace” that has hurt dairy farmers in states such as Wisconsin and New York.
He also is trying to renegotiate the North American Free Trade Agreement among Canada, the United States and Mexico. And earlier this year the Commerce Department made a similar move to impose duties on U.S. imports of Canadian soft lumber.
Friday’s decision concerns a multibillion-dollar deal from 2016 in which Bombardier agreed to sell 75 C Series CS100 jets to Atlanta-based Delta Air Lines. The CS100 is a commercial jetliner that seats about 100 people, on the smaller end of the spectrum for commercial jets.
In April, Boeing brought two trade complaints that teed off the current dispute, the first accusing Bombardier of selling planes in the United States at unfairly low prices and the second accusing it of unfairly benefiting from government subsidies when it competes abroad.
Canadian and British leaders reacted sharply to last week’s decision. The dispute also ensnares the United Kingdom because Bombardier employs a few thousand people at a factory in Northern Ireland.
“This is not the sort of behavior we expect from a long-term partner,” British Prime Minister Theresa May said of Boeing, which is a supplier to the British military.
[Boeing took a foreign firm to task over subsidies. Critics say Boeing gets help, too.]