US Slaps 220% Import Duty on Canadian CSeries Jets

U.S. Department of Commerce Issues Preliminary Countervailing Duty on Imports of 100- to 150-Seat Large Civil Aircraft from Canada

(Source: US Department of Commerce; issued Sept 26, 2017)

By slapping import duties of 219.63% onto CSeries airliners imported into the US, the US Commerce Dept. has ensured that Delta will scrap its order for 75 of these jets, and that Canada won’t buy 18 Super Hornet interim fighters. (Bombardier photo)

Today, U.S. Secretary of Commerce Wilbur Ross announced the affirmative preliminary determination in the countervailing duty (CVD) investigation of 100- to 150-seat large civil aircraft from Canada, finding that exporters of this merchandise received countervailable subsidies of 219.63 percent.

The Commerce Department will instruct U.S. Customs and Border Protection to collect cash deposits from importers of 100- to 150-seat large civil aircraft based on these preliminary rates.

“The U.S. values its relationships with Canada, but even our closest allies must play by the rules,” said Secretary Ross. “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.”

Although Canadian civil aircraft subject to this investigation have not yet been imported, an April 2016 press release announcing the sale of Canadian civil aircraft to a U.S. airline valued the order to be in excess of $5 billion.

The petitioner is The Boeing Company (IL).

Enforcement of U.S. trade law is a prime focus of the Trump administration. From January 20 through September 20, 2017, the Commerce Department has initiated 65 Antidumping (AD) and CVD investigations – a 48 percent increase from the previous year. For the same time period in 2016, The Commerce Department had initiated 44 antidumping and countervailing duty investigations.

The Commerce Department currently maintains 411 AD and CVD duty orders which provide relief to American companies and industries impacted by unfair trade. CVD laws provide U.S. businesses and workers with an internationally accepted mechanism to seek relief from the harmful effects of unfair subsidization of imports into the United States.

Unless the final determination is aligned with the concurrent antidumping duty investigation, Commerce is currently scheduled to announce its final CVD determination in this investigation on December 12, 2017.

If the Commerce Department makes an affirmative final determination of subsidization and the U.S. International Trade Commission (ITC) makes an affirmative final injury determination, Commerce will issue a CVD order. If the Commerce Department makes a negative final determination of subsidization or the ITC makes a negative final determination of injury, the investigation will be terminated and no order will be issued.

Click HERE for a fact sheet on today’s decision.

The U.S. Department of Commerce’s Enforcement and Compliance unit within the International Trade Administration is responsible for vigorously enforcing U.S. trade laws and does so through an impartial, transparent process that abides by international rules and is based solely on factual evidence.

Imports from companies that receive unfair subsidies from their governments in the form of grants, loans, equity infusions, tax breaks and production inputs are subject to “countervailing duties” aimed at directly countering those subsidies.

In fiscal year 2016, the United States collected $1.5 billion in duties on $14 billion of imported goods found to be underpriced, or subsidized by foreign governments.

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Statement on Commerce Department Countervailing Duties Preliminary Decision

(Source: Bombardier, Inc.; issued Sept 26, 2017)

“We strongly disagree with the Commerce Department’s preliminary decision. The magnitude of the proposed duty is absurd and divorced from the reality about the financing of multibillion-dollar aircraft programs. This result underscores what we have been saying for months: the U.S. trade laws were never intended to be used in this manner, and Boeing is seeking to use a skewed process to stifle competition and prevent U.S. airlines and their passengers from benefiting from the C Series.

The simple truth is that Bombardier created a superior aircraft that is more efficient, more comfortable, and quieter. The C Series serves a market segment not supported by any U.S. manufacturer. Delta wants to bring this remarkable new aircraft to the U.S. flying public. Boeing wants to prevent U.S. passengers from realizing these benefits, irrespective of the harm that it would cause to the U.S. aerospace industry and the cost to airlines and consumers.

Looking beyond today’s and next month’s preliminary decisions, the International Trade Commission will determine next year whether Boeing suffered any injury from the C Series. Because Boeing did not compete at Delta and because Boeing years ago abandoned the market the C Series serves, there is no harm.

There is wide consensus within the industry on this point, as well as a growing chorus of voices, including airlines, consumer groups, trade experts, and many others who have come forward to express grave concerns with Boeing’s attempt to force U.S. airlines to buy less efficient planes with configurations they do not want and economics that do not deliver value.

The U.S. government should reject Boeing’s attempt to unfairly tilt the playing field in its favor and to impose an indirect tax on the flying public through unjustified import tariffs.”

Bombardier is the world’s leading manufacturer of both planes and trains. Bombardier is headquartered in Montréal, Canada and our shares are traded on the Toronto Stock Exchange (BBD). In the fiscal year ended December 31, 2016, we posted revenues of $16.3 billion.

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