Trump Goes to War on Trade
The Trump Administration is continuing their protectionist stance as earlier this week the U.S. Commerce Department placed a 220 per cent countervailing duty on Bombardier’s CSeries commercial jet. These crippling sanctions are likely to affect not only Canada but other countries such as the UK and Ireland where Bombardier currently produced parts for the CSeries jets.
These crippling sanctions are likely to affect not only Canada but other countries such as the UK and Ireland where Bombardier currently produces parts for the CSeries jets.
The director of the Center for Trade Policy Studies at the Cato Institute in Washington, DC recently summarized the Trump doctrine very well, commenting
“The current administration has a different view of protectionism, by that they mean we are the United States. The benevolent giant. We have done a lot for the world over the past 75 years, which means everybody needs to abide by the rules of the trading system. But if we fudge the rules, that’s OK.”
The Trump Administrations hard-line stance on the aviation industry is largely against norms as most developed and developing nations do provide large-scale subsidies to their state-based producers.
For example, both Boeing(American producer) and Airbus(European Producer) are beneficiaries of billions of dollars in tax breaks and incentives offered by various levels of government.
The UK Forced to Act
Outside of a general need to protect jobs, the Conservative government of Theresa May is further incentivized to publically and bitterly protect Bombardier as it currently employs over 5000 individuals in Northern Ireland.
These jobs are extra important as her government is largely kept afloat through a deal with the North Irish group the DUP.
Outside of foreign anger from the UK Prime Minister Theresa May, who has now twice urged Trump to head off a potential trade dispute, local business such as Delta are now furious with these new protectionist measures.
Delta Airlines told the U.S. government that it bought the CSeries aircraft because Boeing doesn’t even make a similar-sized commercial jet.
“They did not have a plane that satisfied our mission profile and needs,” said Greg May, a senior vice-president at Delta.
The governments of the United Kingdom and Canada have now threatened to cancel valuable defence contracts that they currently hold with Boeing. This tension could cause serious strain on both the UK and Canada’s new trade intentions as the UK aims to negotiate a post-Brexit deal, and Canada aims to create a well made and fair NAFTA deal.