UK leaders threaten Boeing over new US tariffs on Canadian jets

The United Kingdom on Wednesday warned Boeing it could lose defense contracts in the country after the U.S. Commerce Department — prompted by a Boeing complaint — slapped a preliminary tariff on Bombardier’s new commercial jets.

Bombardier, a Canadian defense firm, employs about 4,000 people at a plant in East Belfast, Northern Ireland.

U.K. Defense Secretary Michael Fallon said the tariffs could “jeopardize” Boeing’s chances of winning government contracts within the country.

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“This is not the behavior we expect of Boeing and could indeed jeopardize our future relationship with Boeing,” Fallon told reporters at a press conference Wednesday.

“Boeing stands to gain a lot of British defense spending. We would prefer this kind of dispute to be settled on a negotiated basis.”

Prime Minister Theresa May also weighed in on Wednesday, a day after the ruling came.

“Bitterly disappointed by initial Bombardier ruling,” May tweeted. She pledged to “continue to work with the company to protect vital jobs for Northern Ireland.”

May had lobbied President Trump to ask Boeing to drop the complaint.

Boeing in April complained to the Commerce Department that Bombardier’s new C-series passenger aircraft — bought by Delta Air Lines — received unfair Canadian government subsidies. The roughly $3 billion in funding allows Bombardier to significantly lower the cost per aircraft and give it a competitive advantage against other companies, Boeing argued.

No U.S. company makes a C-series rival, but Boeing’s complaint was reportedly driven by fears that a more advantaged Bombardier could eventually build bigger commercial aircraft that would compete with Boeing designs. 

The Commerce Department sided with Boeing and on Tuesday imposed a nearly 220 percent tariff on the jets.

“The U.S. values its relationships with Canada, but even our closest allies must play by the rules,” Commerce Secretary Wilbur Ross said in a statement.

The duty will only take effect if the U.S. International Trade Commission agrees with Boeing in the case, with a final decision expected in 2018.

Bombardier on Tuesday ripped the decision.

“The magnitude of the proposed duty is absurd and divorced from the reality about the financing of multibillion-dollar aircraft programs,” the company said in a statement. “Boeing is seeking to use a skewed process to stifle competition and prevent U.S. airlines and their passengers from benefiting from the C Series.”

The company expressed hope that the International Trade Commission will “reject Boeing’s attempt to unfairly tilt the playing field in its favor and to impose an indirect tax on the flying public through unjustified import tariffs.”

The tariff could also put in jeopardy potential business for Boeing in Canada.

Canada is in the midst of negotiations to buy 18 Boeing-made F/A-18 Super Hornet fighter jets for an estimated $5.15 billion. But the country put talks on hold after the defense contractor filed the complaint against Bombardier.

Canada “won’t do business with a company that’s busy trying to sue us and put our aerospace workers out of business,” Trudeau said during a Sept. 18 news conference alongside May.