Bombardier’s C Series jets slapped with 220% tax, making them virtually unsellable

Canada’s beleaguered transportation manufacturer has been dealt yet another financial blow — this time by the U.S. government.

Bombardier’s C Series line of jets will be now subject to a 220 percent import duty, imposed by the U.S. Commerce Department as a punishment of sorts towards the billions of dollars in subsidies that the company received from the Canadian government for its C Series airplanes.

The U.S. government’s decision is the result of a trade complaint that Boeing, an American company, filed against Bombardier back in May 2017, arguing that government subsidies would allow Bombardier to build a larger version of its C Series plane, that would directly compete with Boeing’s own flagship 737 aircraft.

But Bombardier’s C Series planes have already been struggling to compete with the 737 line of jets — the import tax has the potential to make the C Series jets virtually unsellable to U.S. airline companies. Delta Air Lines, for instance, had planned to buy 75 jets from Bombardier, valued at more than $5 billion. That deal could now be in jeopardy, considering that it would now cost Delta more than double the purchase price to buy the same number of jets.

“We strongly disagree with the Commerce Department’s preliminary decision. The magnitude of the proposed duty is absurd and divorced from the reality about the financing of multibillion-dollar aircraft programs,” said Bombardier in a statement.

U.K. Prime Minister Theresa May declared that she was “bitterly disappointed” by America’s decision — Bombardier is one of Northern Ireland’s biggest employers, employing roughly 4,500 workers in Belfast and other parts of the country. Unless Bombardier can source alternative sales outside the U.S. market, these tariffs threaten to put many workers out of jobs.

Britain’s Defence Secretary, Sir Michael Fallon, told reporters in Belfast this morning that the U.K. might consider not buying Boeing products altogether — Boeing’s military arm provides a wide range of fighter jets and other equipment to the British Air Force.

Meanwhile, Canadian Prime Minister Justin Trudeau also threatened to cut ties with Boeing. “Certainly we won’t deal with a company that is attacking us, and attacking thousands of Canadian jobs,” he told reporters outside the House of Commons on Tuesday afternoon.

The tariff decision, however, is not set in stone. The U.S. International Trade Commission will now assess if the deal between Bombardier and Delta, mentioned above, actually hurt Boeing. That ruling is expected in the spring, and will determine if the levy imposed on Bombardier’s CS100 line of jets will be ratified.