The U.S. International Trade Commission (ITC) heard opening arguments this week in Boeing’s complaint against Bombardier for allegedly dumping the narrow-body C Series jets on the U.S. market below cost. The Commerce Department entered a preliminary ruling on Boeing’s behalf assessing a nearly 300% tariff on the 108- to 133-seat CS100s that Bombardier had planned to sell to U.S. launch customer Delta. The ITC will determine whether the preliminary tariff should be made permanent. To win, Boeing will have to convince the Commission that it will suffer a material economic injury as a result of Bombardier’s pricing.
Boeing, in a statement on the proceedings, says, “The C Series would not even exist at this point but for [government] subsidies … Bombardier used these government funds to dump aircraft into the U.S. market at absurdly low prices, millions below their cost of production and millions below the price of the same aircraft in Canada. Bombardier’s conduct is flatly inconsistent with U.S. trade law, and it has caused severe harm to Boeing, its employees, and its suppliers.”
Bombardier and Delta point out that Boeing does not sell any aircraft that compete with the CS100. “Boeing did not lose this sale to Bombardier,” Greg May, Delta’s senior vice president for supply chain management and fleet strategy, told the ITC. “When we chose to add the CS100 aircraft to our fleet, Boeing simply did not and does not have the right-sized aircraft.” The smallest 737 variant in production, the MAX 7, seats between 138 and 172 passengers.
Boeing’s real interest may be in killing the C Series project before Bombardier starts selling the CS300. Early sales of the CS100 will improve economies of scale for Bombardier on the CS100 and the larger CS300, which will compete directly with the 737 MAX 7. “Our Max 7 is at extreme risk,” Kevin McAllister, head of Boeing’s commercial airplanes division, told the ITC. “If you don’t level the playing field now, it will be too late.”
The entire dispute may be made moot by the C Series’ new project backer, Airbus. The European aerospace giant recently took a 50% interest in the project and has said it will produce C-Series aircraft for the U.S. market in Alabama, which may allow Bombardier to escape the tariffs.
