“We understand that both of our countries are stronger when we join forces in matters of international commerce,” a smiling President Trump told a beaming Canadian Prime Minister Justin Trudeau at the White House in February. “We will coordinate closely to protect jobs in our hemisphere and keep wealth on our continent.”
Trump also promised that day to work with Trudeau toward “a stronger trading relationship between the United States and Canada.”
This week, the Trump administration is instead beating up a well-known Canadian aircraft maker to deter it from doing business here. This is no way to make America great.
The Trump administration has proposed punitive duties on the sale of Bombardier aircraft in the U.S., at the behest of rival manufacturer Boeing. Boeing had brought a complaint before the U.S. International Trade Commission against Bombardier after the Canadian company made a deal to sell Delta Airlines 75 C Series aircraft. Boeing thought the reported $20 million per plane that Delta was reportedly paying was too low a figure, and argued that its competitor should be punished for collecting subsidies from the Canadian government and then allegedly selling at below cost.
The Trump administration has taken Boeing’s side, and is urging the trade commission to impose a 300 percent duty on the sales, which would quadruple the price.
We urge the Trump administration to withdraw its support for this protectionist move, for it is a dangerous and irresponsible course. The 300 percent duty will strike all fair-minded people as ludicrous. But it is also damaging to consumers and workers on both sides of the 49th parallel. There would be no winners in this trade. Boeing’s decision to bring this case, as opposed to competing in the business arena, has already cost it a substantial sum. Canada’s government has canceled an order for 18 jet fighters from the company in retaliation for the filing of the complaint against Bombardier.
It makes matters worse that a massive punitive duty would directly harm American revenues and profits, and American workers, too. Trump cannot make America great again by imposing higher costs on Delta, killing airline-related jobs, and raising costs for passengers. Nor will he be helping American workers by disrupting Bombardier’s sales plans, given that the Canadian company is already planning to manufacture jets in Mobile, Alabama. The engine in the Bombardier models happen to come from the American manufacturer Pratt & Whitney. So, who wins in this battle? A few lawyers, presumably, but no one else.
The more important point is that Washington has no proper role in deciding whether $33 million, $20 million, or $100 million is the “correct” price for a particular airplane. The more power it takes to engage in such behavior, the more favoritism and crony capitalism there will be. Past Congresses are to blame for giving such muscles to the federal bureaucracy, but Trump is to blame for flexing them.
As others have pointed out in our opinion pages, Boeing doesn’t even compete directly with Bombardier in this segment of the market. It has no model to match against C Series planes or to meet Delta’s needs on the routes these planes would fly. The purpose of Boeing’s trade case seems to be the deterrence and intimidation of foreign competitors. Boeing, which receives ample government help with export finance from the Export-Import Bank, is merely parading its influence with the federal government by calling in protectionist air support.
If our Canadian friends are distorting the market by subsidizing airplanes, Washington should respond not by jacking up tariffs, but with an offer to undo our own distortions and subsidies in exchange for other countries undoing theirs. That is what free and fair trade looks like.