Shares of Bombardier (BBD-B.TO) plunged as much as 13 per cent on Tuesday, after U.S. President-elect Donald Trump threatened a 25 per cent tariff on imports from Canada and Mexico.
The 13 per cent decline marked the biggest intraday drop for the Quebec-based private jet manufacturer since February, according to Bloomberg, and led the Toronto Stock Exchange as the worst performer on Tuesday. Shares were trading at $96.43 as at 1:30 p.m. E.T. on Tuesday, a decline of nine per cent compared to Monday’s close.
Trump posted to Truth Social on Monday night that one of his first executive orders will be to impose a 25 per cent tariff on all goods imported from Canada and Mexico into the United States. He wrote that the tariff will remain in effect “until such time as drugs, in particular fentanyl, and all illegal aliens stop this invasion of our country.”
The tariff quantum, which is more than the 10 per cent blanket rate that Trump had campaigned on, would “clearly have an impact” on Bombardier’s business, chief executive Eric Martel said on a conference call with media earlier this month. While Martel did not provide specifics in terms of how much of Bombardier’s production and deliveries would be affected by such a threat, he noted that imposing tariffs would have an impact “on both sides of the border.” For example, Bombardier’s newer Global 8000 jet has key components produced at manufacturing facilities in Saint-Laurent, Que., Red Oak, Texas, and Querétaro in Mexico.
On Monday, before Trump’s social media post, Bombardier announced it has delivered the first Global 6500 aircraft to the United States Army’s High Accuracy Detection and Exploitation System program.
The S&P/TSX Composite Index (^GSPTSE) was down about 0.3 per cent as of midday on Tuesday. Other industrial stocks also fell in response to the tariff threat, including Canadian auto parts manufacturers. Magna International (MG.TO) was down about four per cent in midday trading, while Linamar (LNR.TO) fell five per cent, and Martinrea International (MRE.TO) dropped six per cent. Ski-doo and sea-doo manufacturer BRP (DOO.TO) was also down six per cent as of midday on Tuesday.
Bombardier previously found itself locked in a trade war with rival aircraft manufacturer Boeing during Trump’s last term in office. The U.S. Department of Commerce hit Bombardier with a nearly 300 per cent tariff in 2017, saying the company received illegal subsidies and dumped its CSeries aircraft in the U.S. market at low prices.
