by Christopher Guly
OTTAWA, Sept. 28 (Xinhua) -- The U.S. Commerce Department's decision to slap a steep tariff on the sale of Canada's Bombardier's jets has sparked dispute that may strain trade relations between the neighbors.
The Commerce Department on Tuesday backed U.S. aerospace giant Boeing which complained that its Canadian rival Bombardier was benefiting from unfair government subsidies, by imposing a 219.63 percent countervailing duty on Bombardier's C Series commercial jets.
The Canadian company announced last year that it sold C Series commercial jets at a price of 5.6 billion U.S. dollars but has yet to be delivered to U.S.-based Delta Air Lines.
Boeing, which sought an 80 percent duty against Bombardier, accused it of selling its aircraft to Delta "at absurd prices."
"The U.S. values its relationships with Canada, but even our closest allies must play by the rules," U.S. Commerce Secretary Wilbur Ross said in a statement on Tuesday.
In response, Bombardier said in a statement on Tuesday that "U.S. trade laws were never intended to be used in this manner, and 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 insisted that "there is no harm" for Boeing since "Boeing years ago abandoned the market the C Series serves."
On Wednesday, Canadian Prime Minister Justin Trudeau said he was "disappointed" by the U.S. Commerce Department's preliminary ruling.
The final determination by the Commerce Department is expected in 2018.
Trudeau warned a halt to business with Boeing last week while meeting with British Prime Minister Theresa May in Ottawa. He said his government would not "do business with a company that's busy trying to sue us and trying to put our aerospace workers out of business."
Canada plans to purchase Super Hornet fighter jets from Boeing, a deal now becomes unclear given Trudeau's warning and Washington's ruling.
Trudeau's remarks also highlighted an ongoing trade irritant between Canada and the United States.
The North American Free Trade Agreement (NAFTA) allows Canada and Mexico to appeal countervailing and anti-dumping duties imposed by Washington through independent tribunals that have often ruled against the United States rather than through judicial reviews in U.S. courts.
Washington wants to eliminate this dispute-resolution mechanism during the ongoing negotiation on NAFTA.
Earlier this year, the Canadian government said it would give Bombardier 372.5 million Canadian dollars (about 299 million U.S. dollars) in interest-free loans to support its aircraft projects over the next four years.
Last year, the government of the Canadian province of Quebec, where Bombardier is based, invested 1 billion U.S. dollars in the company's C Series program in exchange for a 49.5 percent stake.
