Boeing Accuses Bombardier of Jet-Dumping in New U.S.-Canada Spat

(Bloomberg) -- Boeing Co. accused Bombardier Inc. of selling C Series passenger jets in the U.S. at “absurdly low” prices, adding a new salvo to an increasingly tense trade relationship between the U.S. and Canada.

The U.S. planemaker is asking the International Trade Commission to find that it has suffered injury to its business at the hands of Bombardier and to recommend that the Commerce Department impose duties on the Montreal-based jet builder. Bombardier fell in Toronto trading.

“Propelled by massive, supply-creating and illegal government subsidies, Bombardier Inc. has embarked on an aggressive campaign to dump its C Series aircraft in the United States,” Boeing said Thursday in its ITC complaint.

The allegations open a new front in trade tensions between the U.S. and Canada, which have intensified since President Donald Trump took office vowing to renegotiate the North American Free Trade Agreement and put “America First.” The U.S. recently imposed duties on Canadian lumber, reigniting a longstanding dispute, and Trump has complained about Canadian protections for dairy farmers.

Bombardier said it was is “closely reviewing” filing. In a statement, the company said it “structures its commercial dealings to ensure compliance with the laws and regulations of the jurisdictions in which we operate.”

The company’s widely traded Class B stock tumbled 5.4 percent to C$2.11 at 9:59 a.m. in Toronto after dropping as much as 6.7 percent for the biggest intraday decline in two weeks. Boeing was little changed at $183.43.

Delta Sale

Boeing said a 2016 sale of Bombardier jets to Delta Air Lines Inc. set a “new, low price ceiling” that’s depressing its U.S. jetliner prices. The Atlanta-based carrier agreed to purchase the cutting-edge Bombardier jets for $19.6 million apiece, less than the $33.2 million cost of manufacturing the airplanes, Boeing said.

The Chicago-based company urged the Trump administration to act before deliveries of the Canadian jet begin next year to Delta. JetBlue Airways Corp. is among the potential U.S. customers of the jet, Boeing said.

The emerging tussle echoes longstanding U.S.-Europe disputes stemming from the rivalry between Boeing and Airbus SE.

“Evidently taking a page out of the Airbus strategy book, Bombardier has blatantly and intentionally demonstrated its goal of muscling its way into the U.S. aviation market by offering its heavily subsidized planes at cut-rate pricing,” the U.S. company said.

The C Series jets come in two configurations. A 100-seater lists for $76.5 million while a 150-seat variant goes for $85.7 million. Discounts from catalog prices are customary in the industry.

‘Vigorous Defense’

“The government of Canada will mount a vigorous defense against these allegations and stand up for aerospace jobs on both sides of the border,” the office of Canadian Innovation Minister Navdeep Bains said Thursday in a statement.

The ministry also said the North American aerospace industry is highly integrated, with companies on both sides of the border benefiting from the C Series program. More than 50 percent of the jet’s components come from the U.S., Bains’s office said.

The Commerce Department gives all petitions a thorough review and will do so in this case, said spokesman James Rockas. Further comment would be premature, he said.

The Canadian government earlier this year pledged C$372.5 million ($273 million) to Bombardier to finance two jet programs including the C Series. Last year, Quebec’s provincial government invested $1 billion in the jetliner.

Two-Way Benefits

“Our government will continue to defend with firmness and strength all of Quebec’s aerospace industry, including the commercial partnership we concluded with Bombardier,” Quebec Economy Minister Dominique Anglade said in a statement. “The U.S. and Quebec share a trade relationship that benefits workers on both sides of the border.”

Brazil, home to Embraer SA, has also complained about government aid to Bombardier. In February, the Brazilian government formally sought “consultations” with Canada in front of the World Trade Organization with the blessing of Embraer, part of a simmering battle that predated the Ottawa government’s aid package to Bombardier.