Trump backs down from threat to ban Bombardier sales in U.S

Explainer

U.S. President Donald Trump has reversed his threat to prohibit Bombardier Inc. from selling its aircraft in the United States. He announced the shift during a campaign rally in Wichita, Kansas, on Monday night. Trump said he altered his perception of the Montreal-based company as solely Canadian after learning about its American operations. He credited a call from Kansas Republican Senator Roger Marshall with helping persuade him. The company's share price increased on Tuesday following his remarks.

Trump told the rally audience he now plans to assist the aerospace manufacturer. "I'm going to be helping a certain air company get themselves straightened away," he said. He explained his changed view by saying, "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." Bombardier employs 1,500 people at its defence division headquarters in Wichita and roughly 3,500 workers across the United States.

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The president's decision comes with Kansas emerging as a competitive state in next month's midterm elections. Senator Marshall is in a close race against Democrat Adam Hamilton, according to polls. Kansas has not elected a Democrat to the Senate since 1932. Trump stated that Marshall's intervention led him to reconsider the ban. An analyst noted the earlier threat had not measurably affected American customer demand for Bombardier jets in recent weeks.

What was Trump's original threat?

In September, Trump declared he would block Bombardier's sales in the U.S. unless the company relocated its production there. He made the statement on social media on Sept. 7, writing, "NO MORE SELLING BOMBARDIER IN THE UNITED STATES!" and "If they want our Market, they must build here, and stop treating America like a 'piggybank.'" Analysts warned at the time that such action would damage American workers and parts suppliers. The threat was issued one day before new Canadian retaliatory tariffs on U.S. goods took effect.

This was the second instance this year the president targeted the plane maker. In January, he threatened to ground Canadian-made aircraft and impose a 50 per cent tariff unless Ottawa approved business jets built in Georgia. Bombardier responded to the September warning by detailing its economic contributions within the United States. The company said it spends over $2.5 billion US annually with about 2,800 suppliers located across 47 states, supporting tens of thousands of indirect jobs.

How did Bombardier and markets react?

Following Trump's reversal, Bombardier's stock price climbed. One report showed shares closed up about 4.5 per cent on Tuesday. Other reports indicated a rise of approximately three per cent by the afternoon. A company spokesperson said Bombardier is proud of its American workforce and its recent investments. "Our recently announced investments and newly inaugurated North American Learning Center will support high-skilled jobs for many years to come," the spokesperson said. The company opened a training centre in Wichita last week as part of a $50-million US site investment.

Financial analysts viewed the development positively for investor confidence. James McGarragle of RBC Dominion Securities said removing the regulatory uncertainty helps sentiment. He added that the earlier threat had no tangible impact on U.S. demand for Bombardier's luxury jets over the prior six weeks. The company itself had previously adopted trade-focused language in its public statements, asserting last month that "the American aerospace industry is a clear winner on trade and exports."

What is Bombardier's connection to the U.S. economy?

Bombardier's business is heavily reliant on the American market and supply chain. More than half of the company's total revenue comes from customers in the United States. Analysts estimate that U.S.-made parts constitute at least 40 per cent of the content in most Bombardier aircraft. For its top-tier Global 7500 jet, American components account for over half of the aircraft's total value. Experts warned that banning the manufacturer would have severely disrupted American parts producers and fleet operators waiting for new planes.

The broader U.S. aerospace and defence sector maintains a substantial trade surplus globally, according to industry data. The trade relationship between the two countries remains deeply interconnected despite tariffs on other goods like steel and aluminum. Trump's latest threat against Bombardier was part of a series of trade actions that have included banning many Canadian alcoholic beverages and imposing additional levies. His comments in Kansas provide a respite for the company as political attention turns to the November elections.

With files from The Canadian Press, CBC News and CityNews