Canadian industries concerned about knock on effects of Bombardier tariffs

Decision to impose duties on Bombardier creates uncertainty, including for those supplying raw materials

September 28, 2017
The Canadian Press
The Canadian Press

CALGARY—The US Department of Commerce’s decision this week to slap major tariffs on Bombardier has raised concerns about ripple effects across Canada’s trade exposed industries.

Jean Simard, president of the Aluminium Association of Canada, said the decision to impose duties of 220 percent on Bombardier’s CSeries jets creates uncertainty across the manufacturing sector, including those supplying raw materials.

“This very strong signal of enforcement by the US administration adds up to a very volatile business environment, which nobody likes.”

He said the aggressive move threatens to disrupt the well-integrated manufacturing processes, with industries like aluminum smelting possibly hit by collateral damage from the trade talks.

“When you start tweaking the rules, the complexity of the consequences can be phenomenal,” said Simard.

“Any decision of this kind certainly sends a tremor through the supply chain throughout North America.”

Unifor president Jerry Dias said the Bombardier tariff is the latest U.S. move against many of Canada’s key industries.

“They’re going after Bombardier, they’re talking about steel, aluminum, so there’s a whole bunch of balls in the air right now.”

“They are going after the heart of so many of our industries, so ultimately we need to find a remedy, and I would suggest that has to be fairly quickly before this thing continues to digress,” said Dias.

The concerns for business come as the third round of North American free trade talks wrapped up in Ottawa Wednesday, with little progress on key issues like domestic content requirements in manufacturing.

Canadian softwood-lumber producers have already felt the impact of the tactics with the US imposing tariffs on imports earlier this year.

A spokesman for the Forest Products Association of Canada said the group had no comment on what the Bombardier tariffs might mean for their efforts to resolve their impasse with the US.

Bernard Wolf, an economics professor at York University’s Schulich School of Business, said the US tactics are misguided as they can do real damage to a system that’s benefited everyone.

“There are supply chains that have been established, particularly in the automotive industry, that you can really mess up.”

Wolf said the latest tariffs show the US is looking to take advantage of any perceived subsidies or unfairness in the system.

“This certainly is a red flag in terms of the Americans looking for other areas where there are subsidies,” he said.

“The whole administration is trying to be more aggressive wherever it can. It’s very much America first.”

Ian Lee, an associate professor at Carleton University’s Sprott School of Business, said the moves against open trade go much deeper than US President Donald Trump, and that he’s tapping into greater frustration about perceived negative effects of trade deals.

“He’s decided he’s going to go after those parts of the NAFTA agreement that have disadvantaged the United States.”

Lee said Canada has long protected airlines, banking, telecoms and especially dairy through supply management while pushing for open access to the US markets, and the US is now pushing back.

“We’re approaching a Rubicon, where the Americans are saying here’s our line in the sand, here’s the things we want. And they are going to get it or walk away.”

Graham Lloyd, CEO of the Dairy Farmers of Ontario, said, however, that he has faith the federal government will continue to stand up for the dairy industry, despite US dairy farmers being desperate to access the Canadian market.

“We don’t have any reason to have doubt the government wants to and will continue to protect us.”

While it’s not clear what concessions or policy changes might result from the trade disputes, Simard at the aluminium association says the disputes themselves are making it very difficult for industries to make any sort of long-term plans and investments.

“We’re just having layers of uncertainty upon layers of uncertainty,” he said. “You have to be able to see down the road. Right now we don’t see the road.”