Credit: Boeing ( BA ) won the first round in its tariff dispute with Canada's Bombardier ( BDRBF ) but the decision could cost Boeing important military sales to key NATO allies.
The Commerce Department recommended late Tuesday that a 220% tariff be imposed on each Bombardier's C Series jet delivered to the U.S. after Boeing accused the Canadian aerospace giant of receiving $3 billion in government subsidies, giving it an unfair competitive advantage.
A second ruling is expected on Oct. 5 and could add to the total tariff, which is already higher than the 160% duty Boeing suggested.
The subsidization of goods by foreign governments is something that the Trump Administration takes very seriously, and we will continue to evaluate and verify the accuracy of this preliminary determination," Commerce Secretary Wilbur Ross in a statement.
Boeing shares climbed 0.6% to 255.8 on the stock market today as the broader averages rallied. The stock broke out of a flat base on Sept. 15 with a 246.59 buy point. Bombardier shares, which trade over the counter in the U.S., fell 8.8%.
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But this "America First" decision could hit sales of Boeing military hardware to the U.K. as 4,200 Bombardier jobs in Northern Ireland could be at risk over the decision.
"This is not the behavior we expect from Boeing and it could indeed jeopardize our future relationship with them," British Defence Secretary Michael Fallon told reporters in Belfast, according to Reuters .
British Prime Minister Theresa May said that she was "bitterly disappointed" by the ruling after she had personally asked for President Trump's help in the dispute, according to the report.
The U.K. has a Boeing P-8 maritime surveillance plane on order, along with a fleet of new Apache attack helicopters.
Canadian officials threatened to cancel a planned purchase of 18 Boeing F/A-18 Super Hornet jets over the ruling. Officials also pointed out that the C Series supported 23,000 jobs in the U.S. and the jet's engine is made by United Technologies [ticker symb=UTX ] Pratt & Whitney unit.
United Tech shares rose 2.1% to 117.18.
Delta Air Lines ( DAL ) CEO Edward Bastian told CNBC said the 220% tariff is "absurd." Delta has ordered 75 Bombardier C Series jets, but he said they would be unaffordable with that huge levy.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
