Investing.com -- Bombardier Inc (TSX:BBDb) shares fell 7.2% in Friday morning trade following a social media directive from U.S. President Donald Trump late Thursday evening. The administration has threatened to revoke the flight certifications of Canadian-made aircraft and impose a 50% tariff on future sales.
The move serves as a direct response to what the White House characterizes as a regulatory blockade by Ottawa. "Based on the fact that Canada has wrongfully, illegally, and steadfastly refused to certify the Gulfstream 500, 600, 700, and 800 Jets, one of the greatest, most technologically advanced airplanes ever made, we are hereby decertifying their Bombardier Global Expresses, and all Aircraft made in Canada," the President stated.
Industry analysts at Desjardins, led by Benoit Poirier, characterized the threat as "empty and unlikely to be enforceable" despite the immediate market volatility. The firm noted that only two Gulfstream models are actually awaiting approval from Transport Canada, which manages a sovereign safety review process.
The logistical hurdle of decertifying roughly 2,000 Bombardier jets currently operating in the U.S. would be substantial, said Poirier. Most of these aircraft are owned by Fortune 500 corporations and high-net-worth individuals who rely on the fleet for transcontinental travel.
Further complicating a potential trade war is the deep integration of the North American aerospace supply chain. Bombardier’s flagship Global 7500 derives more than 50% of its value from American components, including systems from GE Aerospace (NYSE:GE) and Honeywell International Inc (NASDAQ:HON).
Prime Minister Mark Carney now faces mounting pressure to expedite the remaining certification reviews for General Dynamics’ (NYSE:GD) Gulfstream G700 and G800. The President warned that "if, for any reason, this situation is not immediately corrected, I am going to charge Canada a 50% Tariff on any and all Aircraft sold into the United States of America."
The recent selloff contrasts with a rally that saw Bombardier’s share price surge by over 1,400% over five years, bolstered by last year’s 160% gain. This ascent has been fueled by a record $16.6 billion order backlog and the successful entry into service of the Global 8000, currently the world’s fastest business jet.
