Trump backs down on threat to ban Bombardier sales in the U.S
The U.S. president changed his view of the company after a call from a Kansas senator ahead of the midterm elections.
Explainer
U.S. President Donald Trump has backed down on a threat to ban Bombardier Inc. plane sales in the United States.
Speaking at a campaign rally in a suburb of Wichita, Kan., on Monday night, Trump said he has changed his perception of the Montreal-based business jet maker.
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"I'm going to be helping a certain air company get themselves straightened away," he told the crowd.
"I always viewed them as a Canadian company ... but now I find out they have a presence here, and we're not hurting them if they're in Kansas. So we'll take care of those people, all right? And the jobs."
What prompted Trump's reversal?
Trump said Monday that a phone call from Kansas Republican Sen. Roger Marshall helped convince him to walk back his threat against Bombardier.
Kansas has turned into a political battleground as Republicans and Democrats fight for control of the typically red state ahead of next month's midterm elections.
Polls show Marshall is running neck and neck with Adam Hamilton, a Democrat in a state that has not elected one to the Senate since 1932.
Wichita serves as the home base of Bombardier's defence division and is where the company employs 1,500 workers.
The company employs about 3,500 American workers across plants in Kansas, Texas, California and other states.
What was the original threat?
Last month, Trump suggested he would bar Bombardier aircraft sales in the United States unless it moved its operations there.
"NO MORE SELLING BOMBARDIER IN THE UNITED STATES!" he posted on social media on Sept. 7. "If they want our Market, they must build here, and stop treating America like a 'piggybank.'"
He made the post a day before Ottawa's retaliatory tariffs on American goods took effect on Sept. 8, a response to the 50 per cent duties Washington imposed on Canadian goods in August.
Trump's September social media post marked the second time this year Bombardier has come into the president's crosshairs.
In January, he singled out Bombardier in a threat to ground all Canadian-made aircraft and slap them with a 50 per cent tariff unless Ottawa approved Gulfstream business jets assembled in Savannah, Ga.
How did Bombardier and markets react?
Bombardier responded last month that it pays more than $2.5 billion US to some 2,800 American suppliers across 47 states each year, indirectly supporting tens of thousands of jobs.
"The American aerospace industry is a clear winner on trade and exports," Bombardier stated in September.
America enjoys a $109-billion US aerospace and defence trade surplus with the world, according to the U.S. Aerospace Industries Association.
Bombardier shares rose $13.85 US or about 4.5 per cent to close at $325.32 US on Tuesday.
James McGarragle, an analyst at RBC Dominion Securities, said Trump's threat did not have a "tangible impact" on demand for the luxury jets among American customers over the past six weeks.
"We view the removal of this regulatory uncertainty as positive for sentiment as it alleviates an important headline overhang for investors," McGarragle said.
How integrated is Bombardier with the U.S.?
Bombardier does the final assembly of its Challenger and Global business jets in Canada, while more than half of its revenue stems from American customers.
Most Bombardier planes feature at least 40 per cent U.S. content, analysts say.
More than half of the value of the ultra-long-range Global 7500 luxury jet derives from American parts.
Last week, the company inaugurated a skills development centre for new aircraft technicians and mechanics in Wichita, part of a $50-million US investment in the site.
"Our recently announced investments and newly inaugurated North American Learning Center will support high-skilled jobs for many years to come," a spokesperson for Bombardier said Tuesday.
National Bank analyst Cameron Doerksen said last month that blocking a major manufacturer from the market would "undoubtedly" cause revenue and job losses at American parts producers.
A ban would have also been "massively disruptive" to the many American jet fleet operators awaiting Bombardier deliveries, he said.
Trump's threat came as Kansans are already feeling the effects of the president's policies, with midwestern farmers seeing diesel prices rise to near-record levels due to the Iran war. Nosy Mag reported this month that Prime Minister Mark Carney told Trump a U.S. diesel deal with Russia helps finance that war.
With files from The Canadian Press, CBC News and CityNews