Embraer (EMB, São José dos Campos U.E. Stumpf International) and Boeing (BOE, Washington National) have officially confirmed they are in early talks over a proposed tie-up.

In a brief joint statement issued on December 21, the US and Brazilian manufacturers said their negotiations would focus on "a potential combination, the basis of which remains under discussion."

Sources familiar with the talks told Bloomberg that options being explored include a joint-venture wherein the two firms would share supplier savings and cross-sell their largely complementary lineup of commercial jets.

Any potential transaction would be subject to approval by both the Brazilian government and regulators, as well as the two companies' boards and shareholders. Given Embraer's strategic nature, any deal in which Boeing is seen acquiring control would likely be vetoed by Brazil's government by virtue of its so-called "golden share". On the announcement of the start of talks last week, President Michel Temer told local media that under his government, "Embraer will be never sold."

The announcement comes in the wake of European consortium Airbus's decision to acquire a controlling 51% stake in Bombardier Aerospace's CSeries project.

The Canadian manufacturer is looking to leverage Airbus's Alabama assembly line to help skirt an impending US Department of Commerce (DOC) decision to slap a 300% tariff on CSeries aircraft being sold to US customers. Delta Air Lines (DL, Atlanta Hartsfield Jackson) is primarily affected as the first of its seventy-five A220-100s are due for delivery in Spring 2018.

US Secretary of Commerce Wilbur Ross said last week his department had upheld a September ruling in which it found CSeries aircraft liable for antidumping duty (AD) and countervailing duty (CVD).

"Commerce determined that exporters from Canada sold 100- to 150-seat large civil aircraft in the United States at 79.82% less than fair value," he said. "Commerce also determined that Canada is providing unfair subsidies to its producers of 100- to 150-seat large civil aircraft at a rate of 212.39%. As a result of today’s decisions, Commerce will instruct U.S. Customs and Border Protection to collect cash deposits from importers of 100- to 150-seat large civil aircraft based on the final rates."

The actual imposition of the tariffs will depend on the outcome of a US International Trade Commission (ITC) investigation, due out in early 2018.

Canada has retaliated by abandoning plans to acquire eighteen new F-18 Super Hornets from Boeing, buying used Royal Australian Air Force F-18s instead.