Who knew trade wars were so complicated? A United States trade agency on Friday surprisingly rejected calls by Boeing and the Trump administration to impose duties on Bombardier’s CSeries jet. It shifts the regional-airplane dogfight back to the marketplace, where it belongs, raising the pressure on Boeing to seal a tricky merger with Embraer.
Chicago-based Boeing’s decision to file a trade complaint against Bombardier was unusual, as it doesn’t make a direct competitor to the 100-to-150-seat aircraft. Delta Air Lines, whose order for 75 Bombardier planes triggered last year’s grievance, said Boeing didn’t make a serious bid of its own but merely offered to sell it some secondhand Embraer jets.
Yet as Bombardier and Embraer extend the size of their flagship regional airliners, they have closed the gap with Boeing’s 737 and Airbus’s A320 models. The threat of potential Chinese competition has made both the American and European giants eager to buttress their flanks.
Commerce Secretary Wilbur Ross said $1.5 billion in Canadian government subsidies for Bombardier would damage United States industry. The 300 percent duties he tentatively approved would have effectively closed the American market to the company. That prompted Bombardier to sell a majority stake in its CSeries program to Airbus. Boeing countered that the deal wasn’t sure to go through and that a promised CSeries assembly plant in Alabama was “years away,” at best.
The United States International Trade Commission, an independent agency, unanimously rejected the arguments of America’s largest exporter and the Trump administration in a stunning rebuke. It suggests that President Trump may find that backing up some of his tough trade talk is as hard as trying to dismantle Obamacare and build a wall on the Mexican border.
The verdict will redouble the pressure on Boeing to strike a deal with Embraer, whose E-jet family competes head-on with Bombardier. The two companies have been talking for weeks, but Brazil’s defense minister, Raul Jungmann, has said a foreign takeover of Embraer, which also produces fighter jets, is out of the question. Boeing’s chief executive, Dennis Muilenburg, will have to think creatively to assuage sensitivities in Brasília so he can get back to the big fight with Airbus.
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