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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.
Bombardier issued a statement on Tuesday, saying that the proposed tariffs could have a broad impact and are “clearly a concern for all companies which participate in a global economy and supply chain.” The company notes that it is confident governments will be able to mitigate the risk of tariffs, through “discussions that place economic prosperity on both sides of the border above all else.”
The company also points to its aircraft bill of materials, and that a majority of its suppliers on most of its aircraft programs originate in the United States.
“On top of this, we directly manufacture a variety of components in multiple states,” Bombardier said.
“These activities, multiplied across our industry, contribute to sustaining tens of thousands of high-value jobs in the U.S. as well as tens of thousands in Canada. All ongoing discussions must focus on preserving them.”