Free Trade

In Rare Move, U.S. International Trade Commission Rejects Ludicrous Tariffs on Canadian Jets

Meanwhile, tariffs pile up on products that lots of Americans actually buy.



A trade panel shot down a plan to put tariffs on imported jets late last week. It was a rare setback for American protectionists, who have been riding high recently.

On Friday, the U.S. International Trade Commission (ITC) rejected the staggering 300 percent duties that the Commerce Department wanted to slap on the Canadian jet maker Bombardier. The Commerce Department's push had come at the request of Boeing, which claimed that Canada's subsidies to Bombardier's planes were unfair and caused great harm to America's aircraft industry.

In a unanimous vote, the ITC declared that U.S. industry was not "not materially injured or threatened with material injury" by the 75 jets Bombardier intended to sell to Delta.

The decision is welcome but narrow. Boeing made some particularly absurd demands that even U.S. trade law could not accommodate, heavily slanted though it is to favor claims of injury from domestic producers.

Under current law, the ITC—which operates as an independent, quasi-judicial body—must make two findings before it can impose anti-dumping duties of the kind Boeing was seeking against Bombardier: first, that a particular product is being subsidized, and second, that this subsidy is harming domestic industry.

That Bombardier is subsidized is without question. In 2015 the company received a $1 billion bailout from Quebec's provincial government, and last year the national government gave it a $300 million loan.

But the idea that it was causing injury to the domestic industry was a real stretch. Boeing did not bid on the Delta contract that Bombardier eventually won. It does not make the type of smaller aircraft the Canadians are accused of trying to dump into the U.S. market. No subsidized Bombardier jets had even been shipped to the United States when Boeing made its complaint, making the company's claims of injury entirely speculative.

So the ITC rejected Boeing's petition. Aside from that, though, the panel has ruled in favor of producers seeking trade barriers in every case decided thus far this year. It has found imports of everything from paper and metal tubing to cabinets and tool chests to be both subsidized and guilty of causing material harm to U.S. industries.

Things are even less restricted with "safeguard tariffs." These require no finding that a good has been subsidized, only that there has been a surge in its imports and that this has caused a domestic inductry to lose profits and market share.

Such was the case with the washing machine tariff imposed at the beginning of last week. Note that unlike jet aircraft, which most Americans would consider a luxury, washing machines are essentially a household necessity. So tariffs are coming directly out of average consumers' pockets.

Already LG Electronics—a Korean maker of washing machines—has told U.S. retailers that it will be upping its prices in response to the 20 to 50 percent tariffs now being applied to its products. Market analysts predict the price of new washers will rise by between $70 and $100.