Jet Maker Bombardier warns Canadian F-35 comments may backfire

(Bloomberg) – Canadian jet maker Bombardier Inc.

“Cancel the F-35 may be a good idea, but we need to think about it,” Bombardier CEO Eric Martel told Business Audience in Montreal. “We have a contract with the Pentagon. Will there be reciprocity there?”

Bombardier has invested in its defense division in recent years, which converts jets into military aircraft. It has two contracts with the U.S. government, one for communication aircraft and the other for surveillance aircraft.

New Canada Prime Minister Mark Carney ordered a review of the F-35 procurement agreement, which is 88 jets of CAD 19 billion ($13.3 billion) that will be completed in 2023. The deal has not been cancelled, but the government needs to “ensure that contracts in current form are in the best interests of Canadians and Canadians, in the best interests of Canadians and Canadians, in line with armored forces,” the defense must say.

Earlier this month, President Donald Trump imposed a 25% tariff on imports of Canadian goods that are not part of the U.S.-Mexico-Canada agreement and added a 25% import tax on aluminum and steel products. He repeatedly said he believed Canada should be the 51st state in the United States – a recent poll showed that 90% of Canadians disagreed – and his administration members took the Canadian government away from its low levels of military spending.

“Trump is not wrong in everything,” Martel said. “We have been hiding behind Big Brother for a while and we rely entirely on him.”

In 2023, Canada eventually concluded a deal to order up to 16 military surveillance aircraft from Boeing, part of an investment worth more than $7 billion, rejecting a competitive bomber proposal.

Shares of the jet have fallen 18% since Trump was elected on November 5, but have been growing about 50% over the past year.

In February, Bombardier set aside financial outlook for the year due to risks and uncertainties about tariffs. “Not providing guidance is the most responsible thing we have to do,” Martel said at the time. About 60% of Bombardier’s business comes from the United States, and its aircraft are currently built and transported under the rules of the United States-Mexico-Canada Agreement.

Bombardier has a complex supply chain that includes manufacturing in the United States and Mexico, with more than 2,800 U.S. suppliers in 47 states. Parts and systems made in the United States account for a large proportion of aircraft costs.

The company’s flagship jet is a global 7500, built wings in Texas, avionics in Iowa and Indiana-made cars. More than half of its construction costs are related to U.S. manufacturing, but assembly and finishing are done in Canada, which makes jets cause tariffs.

Martel said two-thirds of Canadian airline exports depend on the U.S. market.

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