U.S.-Canada trade war: Will Bombardier become its first major casualty?

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U.S.-Canada trade war

Trump’s ultimatum

Donald Trump threatened to ban Bombardier aircraft sales in the U.S. unless the Canadian company starts manufacturing them in the country. “NO MORE SELLING BOMBARDIER IN THE UNITED STATES!” the president wrote on Truth Social. He said companies that want access to the U.S. market should manufacture in the United States.

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The dispute was partly triggered by the situation involving U.S. aircraft maker Gulfstream Aerospace. Trump accused Canada of preventing the company from selling aircraft in its market. Ottawa had previously delayed certification of some Gulfstream models, citing compliance issues, but approved them in February.

Bombardier responded that its business is already closely tied to the U.S., with employees working in more than 20 states. Wings for the Global 7500 business jet are made in Texas, while flight-control components are produced at a facility in the Los Angeles area. The company also buys engines, avionics and other key systems in the U.S.

Bombardier works with more than 2,800 U.S. suppliers. Republican Senator Jerry Moran of Kansas has already contacted the Trump administration and pointed out that Bombardier alone employs more than 1,000 people in Wichita.

How the trade talks collapsed

On August 22, the U.S. imposed 50% tariffs on around $20 billion worth of Canadian imports. The measures covered wine, dairy products, cement, furniture and hockey equipment. The decision followed the collapse of trade negotiations between Washington and Ottawa.

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Just days earlier, on August 18, Donald Trump announced that the two sides had reached a preliminary agreement and gave negotiators three days to finalize the details. However, the deal fell apart at the last minute. Canadian officials said the U.S. had made unacceptable demands affecting domestic industries and sovereignty. Washington, in turn, accused Ottawa of making new demands, including additional concessions on truck tariffs.

Canada responded with tariffs of its own, which took effect on September 8. Duties ranging from 15% to 50% were imposed on around 700 categories of U.S. goods worth roughly $20 billion. Tariffs on many steel products rose from 25% to 50%, while motorcycles, cosmetics, cheese, household appliances, agricultural equipment, paper products and electronics were also affected.

Washington has already threatened new measures in response to Ottawa’s actions. U.S. officials have raised the possibility of additional tariffs and outright bans on certain Canadian imports. Trump has also said he intends to raise tariffs on automobiles from 25% to 50% from January 1 and impose a 50% rate on auto parts, although those measures have not yet been formally introduced.

How vulnerable is Bombardier?

Trump’s threat has so far not triggered a sell-off in Bombardier shares. The stock rose 2.25% over the past day. It is down 14.48% over the past month, but remains up 32.44% since the start of the year and has gained 98.06% over the past 12 months.

Bombardier is also continuing to invest in production. On September 1, the company agreed to acquire a Mitsubishi Heavy Industries facility in Mississauga, Ontario. The plant produces wings for the Global 5500 and Global 6500 business jets. Financial terms of the deal were not disclosed.

The company is also expanding its business in the U.S. Bombardier plans to grow its defense operations and service network, and later this year it intends to open a new facility in Fort Wayne, Indiana.

The U.S. market remains extremely important for the company. Trump claims that more than half of Bombardier’s revenue comes from the United States. If Washington actually imposes a ban on aircraft sales, the consequences for the company will depend not on tariffs, but on how quickly it can offset the loss of its largest market.

The aircraft maker is holding up

For now, Bombardier is difficult to describe as the first major casualty of the trade war. Trump’s threat has not caused its shares to collapse, while the company continues to invest and expand its presence in the U.S. But an actual sales ban would change the situation sharply and cut Bombardier off from one of its key markets.

Bombardier’s case could therefore become a test of Washington’s new trade policy. Until now, the U.S. and Canada have largely exchanged tariffs on groups of goods, but pressure on a specific major company raises the stakes. If the threat is carried out, it will show whether the White House is prepared to accept damage to businesses on both sides of the border in order to put pressure on Ottawa.

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