Theresa May has threatened a trade war with the US after it slapped punitive tariffs on British-built aircraft, casting doubt on a key plank of her Brexit strategy.
The US Department of Commerce decided Bombardier aircraft, built in Northern Ireland, should be subject to 219 per cent import duty after the American aviation giant Boeing complained that Bombardier had been given unfair state aid.
The Government responded by warning that Boeing’s behaviour “could jeopardise” future Ministry of Defence contracts for its aircraft such as Apache helicopters.
The Prime Minister has appealed directly to President Donald Trump to intervene in the dispute, which has dented her hopes of signing a post-Brexit free trade deal with the US.
The escalating row has also put the Conservatives’ relationship with the DUP under strain, as Bombardier employs more than 4,000 people at its Belfast factories.
Mrs May said yesterday she was “bitterly disappointed” with the decision of the US Department of Commerce to propose an interim tariff of more than 219 per cent on the import of Bombardier C-Series jets to the US.
She said that Boeing’s long-term partnership with the Government is being “undermined by this behaviour.”
May says Boeing have undermined the partnership with UK Government
“We are very clear about the importance of Bombardier and the importance of those jobs in Northern Ireland and we will be doing everything we can to ensure that we can see those jobs being guaranteed in future,” she added.
Echoing Mrs May’s comments, Sir Michael Fallon, the Defence Secretary, said: “This is not the kind of behaviour we expect from a long-term partner.
“We have contracts in place with Boeing for new maritime patrol aircraft and for Apache attack helicopters and they will also be bidding for other defence work and this kind of behaviour clearly could jeopardise our future relationship with Boeing.”
His comments were endorsed by Mrs May, who has ordered ministers to “engage intensively” with Boeing, the US administration and others to try to resolve the matter.
The dispute centres on a Boeing complaint that the jets were being dumped in the US at low prices after unfair state subsidies from the UK and Canada had helped Canadian-owned Bombardier win an order for up to 125 aircraft with US airline Delta.
Fears for 4,000 British jobs as Bombardier hit with huge tariff
Canada’s province of Quebec took a £740 million stake in the C-series programme. The recommended tariffs will only take effect if the US International Trade Commission rules in Boeing’s favour in a final decision expected next year.
But the high penalties were recommended despite Mrs May asking President Trump to intervene. Arlene Foster, the DUP leader, insisted the Government must challenge the “completely unjustifiable” ruling.
Ms Foster, whose party the Government relies on to secure key Commons votes, has repeatedly pressed the Prime Minister over the issue.
Speaking to Sky News she said: “Unfortunately, it’s not a surprise. What we must do now is to continue to work with our own Government, with the American government, with the Canadian government in trying to get Boeing to see sense in relation to this issue.
“Obviously, we are very concerned about the jobs here in Belfast and Northern Ireland.”
Theresa May “bitterly disappointed” by Bombardier news
Wilbur Ross, the US Commerce Secretary, said in a statement: “The U.S. values its relationships with Canada, but even our closest allies must play by the rules.
“The subsidisation 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.”
Boeing’s complaint came despite the fact it did not bid for the contracts to supply Delta. A spokeswoman for Bombardier described the proposed duty as “absurd”.
Allie Renison, head of EU and trade policy for the Institute of Directors, told the Telegraph the battle could be a “taste of things to come” when Britain takes back responsibility for trade relations post-Brexit.
“It’s a little unhelpful news at the moment given the US is meant to be our first port of call for trade,” she said.
“After Brexit we’ll have to make decisions and be the subject of decisions including from the US on tariffs and we’d have to work out how we’d respond.”
Boris Johnson, the Foreign Secretary, told The Telegraph: “I hope that it can be resolved speedily and obviously we’re very disappointed by the result. We will be looking at what we can do to ensure free and fair trade to make sure thatBombardier gets a fair crack of the whip.”
Labour leader Jeremy Corbyn also heaped pressure on the Government in his speech to the Labour party conference in Brighton, saying: “If the special relationship means anything, it must mean that we can say to Washington: that way is the wrong way.
“That’s clearly what’s needed in the case of Bombardier where thousands of jobs are now at stake.
“A Prime Minister betting our economic future on a deregulated trade deal with the US might want to explain how 220% tariffs are going to boost our exports.”
Boeing said in a statement: “This dispute has nothing to do with limiting innovation or competition, which we welcome. Rather, it has everything to do with maintaining a level playing field and ensuring that aerospace companies abide by trade agreements.”
The trade row overshadowed the launch of the Institute for Free Trade (IFT), a new think-tank which calls for Britain to reduce trade barriers with non-EU countries after Brexit.
It is backed by Mr Johnson, the International Trade Secretary Liam Fox and the Environment Secretary Michael Gove.
Mr Johnson signalled once again that he favours the shortest possible Brexit transition period, in contrast to Cabinet colleagues such as Philip Hammond.
He said: “We have an extraordinary future ahead of us. “Let’s hope the date is soon upon us without too long a transition period, n’est-ce pas?”