Trade Wars Escalate: Trump Admin Hikes Tariffs On Bombardier To 300%

Tyler Durden's picture

In a decision that's bound to infuriate the leaders of Canada and the UK, the US Commerce Department on Friday tacked on an additional 80% tariff against Bombardier C-Series Jets imported from the US's northern neighbor, adding to a 220% preliminary levy authorized last week. The ruling is the culmination of a long-running feud between Boeing and Bombardier; Boeing accused its rival in April of benefiting from anticompetitive government subsidies. US customs will now begin imposing the now 300% combined tariff, potentially complicating Delta Air Lines' pending purchase order of 75 C-Series jets, a deal that would've been worth some $5 billion to Bombardier. As the National Post noted, the decision will make it effectively impossible for Bombardier to sell its planes in the US. It also has important ramifications for the aerospace industry in both Canada and the UK, and also casts doubt on Bombardier's future after a rocky stretch of thin sales.

"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," Commerce Secretary Wilbur Ross said in a statement.

 

"We will continue to verify the accuracy of this decision, while do everything in our power to stand up for American companies and their workers."

Bombardier hasn't responded to the decision, but last week said the 220% tariff was "absurd and divorced from the reality about the financing of multibillion-dollar aircraft programs" and that it would push for the decision to be reversed in the coming months. Bombardier has long maintained that Boeing can't justify its claim of being harmed by the C-Series since it doesn't manufacture any jets of comparable size.

The Commerce Department was expected to announce the preliminary anti-dumping duties yesterday, but last night said it would hold off until today.  Bombardier has said it's confident the American penalties will be overturned and Canadian Prime Minister Justin Trudeau has blasted Boeing for its complaint, and has said the Canadian government will halt all orders of Boeing equipment until the company drops the complaint. The Premier of Quebec Philippe Couillard has painted the tariffs as "an attack on Quebec" and has said that the province will "resist" the decision. Trudeau is due to visit Washington on Oct. 10 for two days of talks on trade and other issues with President Trump as Canada, Mexico and the US struggle to revise the Nafta trade agreement before their self-imposed year-end deadline. Experts have said they don't expect the Bombardier tariff to impact Nafta talks.

Bombardier's shares have benefited recently from rumors that the company is on the verge of closing major deals with Chinese airlines, but there was little reaction on Friday because the decision was widely expected.

U.K. Prime Minister Theresa May said she was “bitterly disappointed” by last week’s decision, considering Bombardier employs more than 4,000 people at a factory in Belfast, an important constituecy for May's conservative party. UK Trade Secretary Liam Fox and Irish Foreign Minister Simon Coveney reportedly discussed the Bombardier tariffs with Commerce Secretary Wilbur Ross this week.

The case now goes to the International Trade Commission, which is expected to make a final ruling to decide whether Boeing suffered damages as a result of Bombardier's anti-competitive practices. If an affirmative ruling is returned, damages will be assessed.

After Boeing initially requesting an 80% anti-dumping tariff, it hiked that figure to 143.35% after it accused Bombardier of withholding information in the ongoing investigation. The company alleged in a document filed last week that Bombardier had “refused to provide virtually all the information the Department of Commerce requested for its dumping calculations” and that a higher adverse facts available (AFA) margin should be applied “to address Bombardier’s intransigence and its concealment of the true dumping margin.”

Bombardier replied by filing a document claiming it had “responded to each and every request for information by the Department and provided the Department with thousands of pages of evidence.” Delta also filed documents with the Department of Commerce, reiterating that Boeing never competed for the order that eventually went to Bombardier.

Here's a timeline of the Boeing-Bombardier dispute courtesy of the Canadian Press:

A timeline of the commercial dispute between Boeing and Bombardier:

  • - April 27: Chicago-based Boeing Co. asks the U.S. Department of Commerce and the U.S. International Trade Commission (ITC) to take action against Bombardier's business practices.
  • - May 18: The Department of Commerce confirms the beginning of an investigation. Ottawa replies by questioning a military order from Boeing for new Super Hornet jet fighters.
  • - June 9: ITC gives the go-ahead for Washington to continue its investigation into CSeries sales south of the border.
  • - 28 June: The Department of Commerce agrees to delay the disclosure of its preliminary decision on possible punitive duties by two months, until Sept. 25, at Boeing's request.
  • - Sept. 4: Boeing International Division President Marc Allen says the U.S. giant has no intention to back down and withdraw its complaint against Bombardier.
  • - Sept. 5: British Prime Minister Theresa May, in a telephone conversation with U.S. President Donald Trump, pleads in favour of the Quebec manufacturer, which has more than 4,000 employees in Belfast, Northern Ireland.
  • - Sept. 13: Demonstrations in downtown Montreal of hundreds of union members in the aeronautics sector who denounce the Boeing approach.
  • - Sept. 20: Bombardier workers in Toronto walk off the job to attend a rally to support company's battle against Boeing.
  • - Sept. 24: JetBlue becomes latest U.S. airline to write to the ITC urging it to deny Boeing's petition, saying tariffs on the aircraft would harm competition and result in higher airfares.
  • - Sept. 26: Department of Commerce announces a 219.63 per cent preliminary countervailing duty on CSeries exports to the U.S.
  • - Oct. 6: Department of Commerce announced 79.82 per cent preliminary anti-dumping duties on the Bombardier aircraft.
  • - Dec. 18: Department of Commerce expected to release its final countervailing and anti-dumping determinations.
  • - Feb. 1: ITC expected to make its final determination in Boeing complaint.

Read the Commerce Department's fact sheet on the decision:

Commerce Bombardier Fact Sheet by zerohedge on Scribd

 

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cherry picker's picture

I suggest Canada up its prices for electricity and raw materials 500 percent including water and grain.

Five Star's picture

If trade deficits are the problem, the US trade deficit with China is bigger than with every other country in the world combined.

http://thesoundingline.com/us-trade-deficit/

lester1's picture

China would have a violent anti Communist revolution if those Chinese factories were to stop cranking out products for the USA. Those unemployed factory workers will toss out the Communists. China has a LOT to lose in a trade war.

Justin Case's picture

merican factories in China ya mean? There are hundreds of e'm. Those are the fellers that send ya cheap shit that you buy with ZIRP and credit cards. 

If we are looking for evidence of communism in China, the first and most important place to look is at the economy. The economy in China is now decidedly capitalistic in nature. Average Chinese citizens can start their own businesses and put their income into private bank accounts. Chinese citizens can buy stocks in companies and enjoy the revenues or suffer the losses. As of just a few years ago, private property rights have been greatly enhanced in China, and Chinese people can now be more secure that their land will not be taken away from them. Let us not forget about the heavy international investment that has been permitted in China which has played a major role in fueling this developing and booming economy. As a result, there are very rich people and very poor people in China as well as an emerging middle class. Chinese citizens, who always carried a good sense for business but were restricted from entrepreneurship in the past have now been more free to take risks and build successful companies. Thus capitalism has transformed the Chinese economy and changed people’s lives forever.

Some people just can't understand that China now employs capitalist and socialist economic policies! Its ridiculous! How can people be so stupid! China has been reforming from communism for 30+ years now. So many people never change their mind, but never over something so stupid! its not like this is up for debate, 10 minitues on google will show anyone that China is no longer 100% communist.

China is, indeed, going through a transition, but it is not a transition from capitalism to communism. The evidence supports a conclusion that feudal appropriation has prevailed in both agriculture (during the commune-era) and industry (during the SRE-era) in the recent past and is now being displaced by capitalism in industry and increasingly in agriculture. In other words, China is going through a transition from feudalism to capitalism. I just don’t see calling such a transition socialism.

Capitalism will be much more robust if it’s not a monopoly of the West, but flourishes in societies with different cultures, religions, histories, and political systems. Ever seen billionaires in a communist country? Them's the boyz buyin up all the real estate. Must be workin okay for them. Need some of dat in the floundering economy of merica.

BaBaBouy's picture

""Twump Admin Hikes Tariffs On Bombardier To 300%""

Fucking Hillarious . . .

Why knott 1200% or 3450% . . ?

Fucking Joke

Thoresen's picture

How can a tariff of 300% possibly be correct? What kind of subsidy must Bombardier be getting?
Maybe it's another part of the elite plot to break up any hope of the UK getting equitable deals with the US and Canada post Brexit.

nope-1004's picture

You hit the nail on the head.... the crappy french company is so heavily subsidized already that it's sickening.

 

Sages wife's picture

That's correct. Plus, profits go to Class 1 shareholders; to THE family. Taxpayers and Class 2 shareholders are liable for the rest. Good gig.

Offthebeach's picture

Almost  40% is US Pratt & Witney engins.  Throw in avionics,  climate control, landing gear and tires...over half US.  Then interiors and wings from UK.

Sounds Canadian to me.

Justin Case's picture

subsidy must Bombardier be getting

Oh much less than Boeing.

Anon2017's picture

The Canadian import duty on commercial quantities of dairy proucts from the US goes as high as 300% and has been in place for years to protect Canadian egg producers. I doubt that the UK or Brexit have anything to do with this latest pissing contest.

Justin Case's picture

Since 1970 Canada's dairy industry has been operating under a supply management system by which supply is matched with domestic demand. In the process of controlling the supply the amount of imports are made predictable through a system of tariff rate quotas. Canada annually allows in a pre- determined amount of dairy products in various categories duty free from the United States, but once the volume limit has been reached (quota), anything over that amount is subject to tariffs of a minimum of 200 per cent and up to 313.5 per cent.

Itinerant's picture

Bombardier has received government help/facilities, but that is also true for the entire aerospace sector. Chinese plane manufacturers get help from the State. Airbus gets help. Production of military jets/helicopters get help all over Europe. And of course, where would the American airplane manufacturers be without government contracts and tax facilities? The 300% is typically Trump, just making a statement that will get no one anywhere. It's like the wall that Mexico is supposedly going to pay for.

msamour's picture

I was thinking the same thing. It is time Trudeau walks away from the NAFTA, and the FTA and we revert to WTO tarifs. If all the world leaders had any balls, they would get together and cease all trading with the US. The empire is collapsing anyways. Might as well put the country out of its misery in a single swoop...

lester1's picture

NAFTA and the WTO are like cancers on the USA. 

east of eden's picture

Why bother raising the prices. Just wait until mid-January, the turn the switch OFF. THey will be dead in a week.

arby63's picture

That's fine. Give it a whirl.

harblthecat's picture

The US shale producers would love the hike in electricity.  All that natural gas in the Bakkan and Permian could easily take up the slack of losing Ontario nuclear and Ontario/Quebec hydro.

The midwest farmers (and frakkers) would also love the tarriff on grain.  The primary route to market for Canadian grain is through North Dakota - where Canadian farmers in the Prairies cause shortages in rail transport for American farmers and shale oil producers.  Take the Canadian grain out of the picture, and the excess rail capacity makes it that much cheaper for the American farmers/frakkers to get their product to market.

Trump is holding all the cards in this one.  Arguably the only 3 commodities the US needs from Canada that they would notice (oil, potash, and uranium) are in the two provinces (Alberta and Saskatchewan) who have serious axes to grind with Ottawa and would love to have the Donald walk all over.

Kayman's picture

"I suggest Canada up its prices for electricity and raw materials 500 percent including water and grain."

And then what? Spill the water over the dam(s) ?  Increase raw materials costs to China?  Make lumber even more expensive?  Divert the Saint Lawrence River into Hudson's Bay?  And grain for fucks sake?  The U.S. is awash in grains.

Bombardier is a bankrupt (minus $8 billion in negative net worth) joke and only survives to buy Quebec votes. No other reason.

besnook's picture

war with canada should be a cakewalk. the will shower us with hot poutine in thrir gratitude.

cherry picker's picture

Go ahead.  Make our day.

You aint going to take this country like Iraq.

 

Juggernaut x2's picture

Take off you hoser- the TX Nat Guard could roll up Canada in a week. You can't shoot down a B-52 with a 12 Gauge.

east of eden's picture

You American's never fail to think you are such hot shots eh?

Well, when half your army was incapable of fighting in the Battle of the Bulge, it was Canadians who saved your sorry fucking asses. Too bad. We should have let the Germans annihilate you.

But come on up. We did you in 1812, badly, and we will do you again.

Texas National Guard my ass. I'd love to see Texans try to fight in Ontario, in February. HAHAHAHAHAHA. They couldn't even fight in Virginia in the winter.

 

Offthebeach's picture

Labatt breath.

The only Canadians were a parachute Battalion ( 1,000 +/- ) that showed up the last few days, after the German offensive was well stopped.  

A BATTALION. One.  Single.   Unlike, say, the 101st Airborne DIVISION (10,000 ), ( holding Bastone road crossing), Or Patton's 3rd ARMY.(  150,000 ) 

+/- Something like 400 HUNDRED American Battalions fought in the Bulge. A crazy, useless delusional sweep of Hitlers, very much appreciated by the kill them were you find them strategy of Eisenhower. 

Deathrips's picture

The proxy British imperialist arm of north America Canada..burned down the original white house.

You feudal communists of canada sure are confused as fuck bragging about that.

CAD is falling against the most printed currency in history the USD....any guesses as to why?

 

Identity nationalism sucks..and I know not all canadians are dumb as a moose...and likewise many americans arent as dumb as a mule.

Unfortunately not the majority in this mob rule world.

 

RIPS

 

AnonG-Man's picture

I thought Trump Supporters do not support wars and violations of the Constitution to wage unjust wars? 

Including not supporting violations of the U.N. Charter, Nuremberg Principles, and the Geneva Convention?

Here's what I think - the minority of constituent voters in America support violations of all these if they are made to believe it is necessary (propaganda) or merely support their chosen candidate.  Nothing much has changed.

east of eden's picture

Shotguns?

We will have S-400's for your so called Air Farce, and Iskanders for your brigades.

besnook's picture

all canadians need to realize is they can stay in florida all year(as long as they tip properly) and the deal is done, not a shot fired.

east of eden's picture

My family has been fighting these fuckers since the mid-1750's, and my father always said they would try it again. 

It's the only thing they know. Steal at the point of a gun.

arby63's picture

Shut up retard. We're talking trade.

Idiot.

Anon2017's picture

No they would annex it like Germany took over Austria in 1938.

Kayman's picture

Hey Cherry - you got to change your first name to "Nose".

Why would the U.S. want to take over Canada, eh?  The U.S. has way too many government employees already.

east of eden's picture

You're principal location for launching an attack into Canada would be Fort Drum.

I've studied the situation throughly over the last few weeks.

Go ahead, put your armoured brigades over the Thousand Islands Bridge, and then watch what happens.

Hint:. You won't even need body bags.

besnook's picture

we just tell quebecois they can have their own state and whatever they can take from ontario and it's game over. we don't want to speak french and they don't ant to speak english, a match made in heaven.

east of eden's picture

You think the Quebecois trust you? HAHAHAHAHAHAHAHAHA.

east of eden's picture

You're country is finished. Kaput. You are bankrupt. You're society is collapsing all around you.

Who do you think is going to fight for a government that regularly tries to kill them and their families?

Douche.

Kayman's picture

In the rest of Canada the saying was, "Quebec can go, but they have to take Ontario with them." And it wasn't a joke.

The 2 bankrupt provinces that bleed the rest of Canada Dry.

east of eden's picture

Won't you be surprised when the Vandoo's and 2,500 Mohawks sweep in behind you, while our artillery pounds you to fucking dust, in a killing zone we have maintained all these years now. The Vandoo's prefer crucifiction; the Mohawks scalp. Take your pick.

You do know how the Mohawks feel about you, don't you?

Laughing.Man's picture

Mohawks?  LOL  Are you kidding me?  Assuming they manage to stay sober long enough, I highly doubt that they'll fight for Canada.

east of eden's picture

You do realize that there are over 160 Mohawk command posts between Akwasasne and Belleville, don't you? Do you think they maintain those command posts for fun?

You are an aresehole and don't know shit.

abgary1's picture

Who needs a war?

At this point Alberta is willing to separate freely!

The communist bitch Notley is finished politically so fuck Ottawa, Quebec and BC!

johnnycanuck's picture

The US and the Saudi's team up to fuck Russia and Iran by over producing oil and the price drops by over half.

Notley gets elected, Cons blame Notley for budget problems. Problems that already existed during the  decades long Conservative dynasty in Alberta.  Typical raging conbot nonsense.

east of eden's picture

Yes, unfortunately, ever since their inception, the typical 'merican response to ANY disagreement is to reach for a gun.

Well, let them. Let them see what happens. And this time we won't be hamstrung by incompetent British commanders who have secret orders to yield ground. This time, we go to Washington and fix the problem once and for all.

harblthecat's picture

The US did no such thing.  They just invented a technology stack that makes them independent of foreign oil.  Without Alberta oil, they have to sail their navy in the Persian Gulf and put boots on the ground to keep the peace between the warring factions (Saudi and Iranian).  With Alberta oil, they just pull their carriers out, watch the whole region burn to the ground, and enjoy continental energy self-suffeciency without having to fire a bullet.

Alberta is going to be the most important strategic region in North America - because the Americans would rather buy our oil than send their kids to their deaths propping up Saudi Arabia.

Notley doesn't realize this.  Neither does Trudeau (and most of Canada).

We Albertans have a good cause to want to separate and thanks to Quebec, all the legal means to do so peacefully.

johnnycanuck's picture

The US isn't independent of foreign oil, far from it.  Even Canadian oil is foreign oil when it crosses the border and something like 3 mbd cross into the US.   Lot's of other foreign oil going there too and as for your shale miracle, it's a ponzi scheme kept afloat by Zirp and QE so far.

 

abgary1's picture

Say what you want but Albertans are sick of getting fucked over by self-serving public servants at all the political levels!

 

Kayman's picture

And a nice finishing touch from the leader of the country, Pierre, jr.- fuck you Alberta, we don't need your stinking oil in Ontario or Quebec.  We would rather have Middle East oil/air pollution. 

Jeez, the Quebec Mafia sure is pissed at Trump.

Philthy_Stacker's picture

Worked well for you last time. It was 1812 I do believe. At least you got a shiny new Whitehouse afterward.

cherry picker's picture

Also Canada should ban all Trump businesses