Bombardier braces for further U.S. duties
Bombardier Inc. will likely face additional massive duties when the U.S. government issues a preliminary decision on Boeing Co.’s dumping allegations on Thursday, but one analyst says growth in the business jet market could offset the overhang caused by the ongoing trade dispute.
Boeing had asked the U.S. Department of Commerce to impose an 80-per-cent anti-dumping duty on U.S. imports of the C Series jet, but hiked that figure after it said Bombardier withheld important information pertinent to the investigation. In a document filed earlier this month, Boeing said that as a result of Bombardier’s alleged non-compliance and “egregious” conduct, the government should apply an adverse facts available (AFA) margin of 143.35 per cent.
The preliminary anti-dumping decision, set to be released Thursday, comes a week after the U.S. government hit Bombardier with a massive 220-per-cent countervailing duty that has effectively shut the company out of the U.S. market when it comes to the C Series.
“It’s almost written in stone that they are going to face another massive margin, given what the Commerce Department found with the countervailing duty,” said Gary Hufbauer, a senior fellow at the U.S.-based Peterson Institute for International Economics.
Boeing first filed a petition with the U.S. Department of Commerce in April asking it to investigate Bombardier, which it says embarked on “an aggressive campaign to dump its CSeries aircraft in the United States” and offered the new aircraft to Delta Air Lines Inc. at an “absurdly low” price.
Hufbauer said while Bombardier will almost certainly be hit with more hefty duties on Thursday, Boeing has to prove to the Washington, D.C.-based International Trade Commission that it has been materially injured or threatened by injury as a result of the C Series sale, which could prove to be tough for the Chicago-based company.
“At this point, I think the only hope for Bombardier in this legal battle that they’re in is at the ITC, when they issue their final determination on injury next year,” Hufbauer said. “I think it would be remarkable if the ITC found injury in the final determination.”
Desjardins Capital Markets analyst Benoit Poirier said in a note to clients that improvements in the business jet market could be a key driver of the firm’s profitability,