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The US Just Slapped Another Tariff on the Bombardier CS, Taking it to 300%

Oct. 06, 2017
3 min read
The US Just Slapped Another Tariff on the Bombardier CS, Taking it to 300%
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United States-based customers of the Bombardier C-Series will now have to pay almost 300% in duties to get their jets, a move that makes it all but impossible for the Canadian company to sell its flagship product in the biggest aviation market in the world. The US Department of Commerce announced on Friday that it's adding another 80% levy to a 220% tariff imposed last week — any US carrier that wishes to add the CSeries to its fleet would have to shell out three times the price it pays to Bombardier in tariffs to the US government.

US manufacturer Boeing originally complained to the US government that Bombardier had received government subsidies and was selling its CSeries to US carriers at a lower price, a practice known as dumping. Friday's new ruling, if it stands, is sure to kill all sales of the CSeries to US carriers, jeopardizing the future of the entire program.

Keep in mind that these tariffs won't be finalized until February, when the US International Trade Commission will have the final say in the matter. However, given that two decisions have already been made in favor of the tariffs, it's not looking promising for Bombardier. If the decision holds at that level, Bombardier could choose to take it to a higher level, such as the US Court of International Trade in New York, or the North American Free Trade Agreement (NAFTA) or even the World Trade Organization (WTO.) In the meantime, though, it's unlikely that any US customers would risk buying an airplane whose price is effectively quadrupled.

The CSeries comes in two models, the CS100 and the CS300. In 2016, Delta placed an order of 75 CSeries with an option for 50 more. In August, Delta announced that New York would get the carrier's first CS100 jet. However, Delta's deal with Bombardier could now be in jeopardy if the tariff ruling on the CSeries stands.

Boeing has defended its complaint of anti-competitive practices. "Today's decision follows a fact-based investigation by the Commerce Department and it validates Boeing's dumping complaints regarding Bombardier's pricing in the United States," the company said in a statement. "This was an avoidable outcome within Bombardier's control. The laws governing global trade are transparent and well known."

The view from Canada is exactly the opposite. When the first tariff was announced last week, Prime Minister Justin Trudeau said that "We won't do business with a company that's busy trying to sue us and trying to put our aerospace workers out of business'' — a clear indication that Boeing can pretty much forget about a $5 billion Canadian order for F-18 Super Hornet jets that looked very much like a done deal before the Bombardier spat.

Swiss Air is the world's largest operator of the CSeries. It has eight CS100s and three CS300s and was the first carrier to operate the CSeries in the world. If the Delta deal stands, the US airline would take over Swiss' position with the world's largest CSeries fleet.