The US will impose a duty of almost 220% on Bombardier CSeries imports if a parallel price-dumping investigation finds subsidies on the narrowbody jet ordered by Delta Air Lines in April 2016 threaten to materially damage Boeing. The duty is expected to be in place before deliveries to Delta begin in April.

“The US Department of Commerce today affirmed that Bombardier has taken massive illegal subsidies in violation of existing trade law,” Boeing said after a Sept. 26 preliminary ruling by the Commerce Department. “Early next month, Commerce is expected to confirm the magnitude of the illegal dumping and announce additional duties.”

Boeing claims the CSeries was sold to Delta for less than $20 million, well below the $33 million price of production—figures Bombardier and the airline dispute. The manufacturer sought a duty of 160%, but Commerce has assessed a subsidy rate of 219.3%.

“We strongly disagree with the Commerce Department’s preliminary decision,” Bombardier said. “The magnitude of the proposed duty is absurd and divorced from the reality about the financing of multibillion-dollar aircraft programs … US trade laws were never intended to be used in this manner.”

Boeing alleged the CS100 price secured by Delta endangers the future of the 737 MAX 7, the smallest version of the MAX family, although the US manufacturer acknowledges it did not offer the aircraft to meet Delta’s requirement for a 100-110-seat aircraft.

This rapid, US-only action contrasts with the long-running battle over Airbus and Boeing subsidies, which has been ongoing at the World Trade Organization (WTO) since 2005. If the US imposes the countervailing duty on CSeries, Canada is expected to take its case to the WTO.

“The US values its relationships with Canada, but even our closest allies must play by the rules,” US commerce secretary Wilbur Ross said. 

“Commerce’s preliminary determinations almost always rule in favor of the US complainant,” Canadian foreign affairs minister Chrystia Freeland said. “Canada simply disagrees with the anti-dumping and countervailing duty investigations … This is clearly aimed at eliminating [the CSeries] from the US market.”

UK Prime Minister Theresa May said on Twitter that she was “bitterly disappointed” by the Commerce decision. Wings for the CSeries are produced in Northern Ireland and the UK provided repayable launch aid for the aircraft alongside the governments of Canada and Quebec.

In addition to the parallel price-dumping and countervailing duty investigations in the US by the Commerce Department and International Trade Commission, Canada faces a WTO dispute filed earlier this year by Brazil and Embraer over subsidies for Bombardier and the CSeries.

“If Commerce makes an affirmative final determination, and the US [ITC] makes an affirmative final decision that imports of aircraft from Canada threaten material injury to the domestic industry, Commerce will issue a [countervailing duty] order,” the Commerce Department stated.

If the order proceeds, US customs will be instructed to collect cash deposits from importers of CSeries aircraft. Delta has not commented on the preliminary decision and Bombardier has declined to discuss what other options it may have if the duty is imposed.

Graham Warwick/Aviation Week