By Sara Sjolin, MarketWatch
The row between the U.K. and Boeing Co. escalated on Thursday, with British Prime Minister Theresa May threatening to stop ordering planes from the U.S. aerospace giant.
Speaking at the Bank of England’s 20-year anniversary event, the U.K. leader expressed disappointment over the dispute that has been going on since Boeing /zigman2/quotes/208579720/composite BA +0.27% complained that Canada’s Bombardier Inc. /zigman2/quotes/208994866/delayed CA:BBD.B -1.15% has received illegal state aid to keep prices low. The row has put more than 4,000 Bombardier jobs in Northern Ireland at risk.
“What I would say in relation to Boeing is that of course we have a long-term partnership with Boeing in various aspects of government and this is not the sort of behavior we expect from a long-term partner and it undermines that partnership”
U.K. Prime Minister Theresa May
The U.S. International Trade Commission on Tuesday ruled that it would slap a 220% tariff on the cost of Bombardier CSeries jets sold to the U.S. The decision came after Boeing last year complained to the authorities that Bombardier received unfair subsidies from the Canadian government when it sold 125 planes to Delta Air Lines Inc. /zigman2/quotes/200327741/composite DAL +0.07% at a big discount.
Wings for the CSeries jets are made in Northern Ireland, where Bombardier is the largest manufacturing employer. May has asked U.S. President Donald Trump to intervene in the dispute, and the tariff decision is now seen as denting hopes of a post-Brexit free trade deal between the U.K. and U.S.
Allie Renison, head of EU and trade policy for the Institute of Directors, told the Telegraph newspaper that it's “unhelpful news at the moment given the U.S. is meant to be our first port of call for trade.”
“After Brexit we’ll have to make decisions and be the subject of decisions including from the U.S. on tariffs and we’d have to work out how we’d respond,” she said according to the paper.
What’s more, after losing its parliamentary majority in the June election, May’s Conservative Party is dependent on Northern Ireland’s Democratic Unionist Party to stay in power and stay on track with Brexit negotiations.
DUP leader Arlene Foster has piled pressure on May to secure the Bombardier jobs, insisting the government challenges the “completely unjustifiable” ruling by the U.S. trade commission.
Boeing last week sought to reassure the U.K. that it values the two’s 80-year partnership, reminding it that 16,500 people work in the company’s direct supply chain in Britain.
Bombardier shares have tumbled 16% in September so far, while Boeing shares are up 7.6% for the month.