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US slaps more duties on Bombardier

08 October 2017

On Friday, the U.S. Commerce Department announced that it would impose an 80-percent preliminary anti-dumping duty against importers of Bombardier's C Series 100-to-150-seat civilian aircraft following a complaint by Boeing that Bombardier allegedly priced its aircraft "millions below production cost in an illegal effort to grab market share in the U.S. single-aisle airplane market".

A second levy of 80% is also being applied to Bombardier's sales to the U.S. after a preliminary finding that the jets were sold below cost price to Delta Air Lines in 2016.

The Commerce Department's import duties apply not just to Bombardier, but all aircraft of that size imported into the United States from Canada.

The Commerce Department proposed a 79.82 per cent antidumping duty after a preliminary finding that the jets were sold below cost to Delta Air Lines Inc (DAL.N) in 2016.

The report said more than half of the materials Bombardier buys for the new CSeries plane come from US suppliers, with the most spending in California, Connecticut, Illinois, Iowa and Kansas, the report said.

Trade unionists expect a final ruling on the pricing policy to be made in February.

It's the second round of import duties in as many weeks for Bombardier.

Bombardier is already facing a 220% tariff on a new model of passenger jet as part of a separate investigation into claims from USA firm Boeing (NYSE: BA - news) that it received unfair state subsidies from the United Kingdom and Canada. The Canadian manufacturer argues that Boeing doesn't make planes that compete with the aircraft - an assertion that Delta backed up in its testimony before the International Trade Commission.

Mr Turner said: "This latest threat of additional tariffs by the USA government, raising to 300% the tariffs imposed so far, highlights an impotence on behalf of a UK Government whose ministers through their inaction appear happy to put Trump's "America first" policy ahead of UK manufacturing jobs".

U.S. Commerce Secretary Wilbur Ross said in a statement on Friday that "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".

Bombardier is bracing for a similar type of announcement pertaining to anti-dumping duties, but has said it's confident the American penalties will be overturned.

"We will stand up and we will fight".

Ottawa and Bombardier have in turn accused Boeing of manipulating the US Trade Remedy System to try to stop a rival from selling on the US aviation market.

A protracted battle could then ensue if either side appeals the case to the U.S. Court of International Trade, brings it before NAFTA dispute bodies, or even take the matter to the World Trade Organization.

Boeing accuses Bombardier of selling its biggest jet in the USA at less than fair value, while benefiting from unfair government subsidies. The program is expected to generate more than US$30 billion in business over its life and support more than 22,700 American jobs in 19 states.

Prime Minister Justin Trudeau and May are appealing directly to U.S. President Donald Trump.