US confirms punitive tariffs of nearly 300% on Bombardier planes

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Washington (AFP)

The US Commerce Department on Wednesday confirmed its decision to impose punitive tariffs of nearly 300 percent on airplanes manufactured by Canada's Bombardier in a trade dispute that has inflamed relations with Ottawa.

The ruling affirms a preliminary finding that Bombardier receives unfair subsidies from the Canadian government that allows it to sell planes at below the cost of production, and compete unfairly with American aerospace giant Boeing, which lodged the complaint.

Boeing filed the case against its Canadian rival after Delta Air Lines ordered 300 of the C-Series planes that can seat 100-150 passengers. The complaint found a receptive ear in President Donald Trump, whose "America First" agenda has included taking a tough line in matters of international commerce.

"This decision is based on a full and unbiased review of the facts in an open and transparent process," Commerce Secretary Wilbur Ross said in a statement.

"The United States is committed to a free, fair, and reciprocal trade and will always stand up for American workers and companies being harmed by unfair imports."

Commerce ruled that the planes -- none of which have been imported into the country yet -- should be subject to duties totaling 292.21 percent.

The decision is subject to final approval by the US International Trade Commission, a quasi-judicial agency, which is due February 1, though it rarely differs from Commerce.

Boeing argues that Bombardier signed a deal to sell its new single-aisle CS 100 planes with a price tag of just $19.6 million each, far below the $33.2 million construction cost, and a pittance compared with the list price of $79.5 million -- though that amount is almost never paid.

Bombardier calls Boeing's criticism unfounded, saying the entire complaint has been overtaken by events.

In October, shortly after the preliminary tariffs were announced, Boeing's European archrival Airbus took a majority stake in the C-Series program, and announced the planes would be built at the Airbus plant in Mobile, Alabama.

Bombardier also has argued that Boeing does not manufacture a direct competitor to the CS 100, and its robust order book of 737 planes proves it has not been adversely affected by unfair trade.

The criteria of material injury to a US company is the usual standard for Washington to launch a trade case and impose punitive duties on a particular import.