MONTREAL/NEW YORK: Canada’s Bombardier Inc hit back at rival US planemaker Boeing Co’s claim that it sold jets well below cost to win market share in the United States, the latest sign of increasing trade tensions between the two countries.
The risk of the United States imposing a tariff, which would likely depress sales of Bombardier’s newest jet, and concern over how big that tariff might be, unsettled investors, sending the Canadian company’s shares down just over 4 per cent.
Boeing wants the US government to investigate what it describes as rock-bottom prices for Bombardier’s new C Series aircraft, including an “absurdly low” sum of $19.6 million it says Delta Air Lines Inc paid for a jet costing $33 million to build.
“The allegation is absurd,” Bombardier spokesman Bryan Tucker said, in response to numbers contained in a petition sent to the US Commerce Department by Boeing on Thursday.
The spat comes days after Washington imposed duties averaging 20 per cent on imports of Canadian softwood lumber, prompting claims in Canada that Boeing was taking advantage of the Trump administration’s tougher stance on trade.
Boeing spokesman Dan Curran said the filing against Bombardier was “an initiative we chose to take ourselves”.
He declined to say whether Boeing also planned to ask the United States to pursue Canada through the World Trade Organization, as it has against European rival Airbus.
Domestic cases, where companies can petition for duties on specific products, typically take around a year.
That is much quicker than a 13-year-old transatlantic battle on jetliner subsidies at the WTO, an international forum open only to nations.
Planemakers “often sell below costs to break into a new market or with a new product, particularly if it involves a significant launch customer,” said US-based trade policy expert Joel Johnson.
Such tactics cause long-term harm by creating momentum that rivals find hard to reverse, Boeing’s petition said, although industry analysts say Boeing and Airbus both regularly offer discounts of 50 per cent or more.
— Reuters
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