Back to news

June 14, 2018 | Local, Aerospace, Naval, Land

Trade dispute could leave U.S. firms out of the running to sell military equipment to Canada

U.S. President Donald Trump's tirade against Canada and threats to punish the country could undermine efforts by American firms trying to sell fighter jets and other military equipment to the Canadian Forces, warn defence and industry analysts.

One European firm, Airbus, has already been talking with Canadian officials to pitch its plan to build fighter jets in Quebec as it positions itself to win the $16-billion deal to replace CF-18 aircraft.

An Italian aerospace firm, Leonardo, is looking at building helicopters in Nova Scotia as it moves towards negotiations for a search-and-rescue aircraft modernization project the Department of National Defence says will be worth between $1 billion and $5 billion.

Trump has hit Canadian aluminum and steel with tariffs, claiming their import is a threat to national security. After the weekend G7 meeting and Prime Minister Justin Trudeau's reaffirming that Canada would reciprocate with tariffs on specific U.S. products, Trump vowed more economic grief that will “cost a lot of money for the people of Canada.”

Trump's move comes at a time when European firms are courting the Canadian government, particularly on big-ticket defence items such as aircraft and warships. Billions of dollars in new purchases are potentially at stake and European firms had a strong presence at the recent CANSEC military equipment trade show in Ottawa.

“Trump certainly isn't helping U.S. defence companies who want to sell to Canada,” said Martin Shadwick, a defence analyst in Toronto. “It would be very difficult at this point from a political optics point of view for the government to announce awarding contracts to any American firm.”

Shadwick said whether that situation will continue for the next several years, when for instance the decision on new fighter jets is supposed to be made, would depend on any further actions by the president. Two U.S. aircraft, the Boeing Super Hornet and the Lockheed Martin F-35, are among the top contenders in that jet competition. The other three aircraft are from European companies.

An earlier trade dispute with Canada has already backfired on Boeing and the Trump administration, costing the U.S. billions in fighter jet sales. Last year Boeing complained to the U.S. Commerce Department that Canadian subsidies for Quebec-based Bombardier allowed it to sell its civilian passenger aircraft in the U.S. at cut-rate prices. As a result, the Trump administration brought in a tariff of almost 300 per cent against Bombardier aircraft sold in the U.S.

In retaliation, Canada decided against buying 18 new Super Hornet fighter jets from Boeing. That deal would have been worth more than US$5 billion.

Christyn Cianfarani, president of the Canadian Association of Defence and Security Industries, said it is too early to determine the impact of the U.S. tariffs on the domestic defence industry. “Tariffs are never good for trade or business,” she added.

“CADSI is monitoring the issue and consulting our members to better understand the potential impact to Canadian firms, both in terms of the direct impact of any tariffs and the more indirect, long term impact on supply chains and market access,” she said.

There is growing concern that Canadian aviation firms could be hurt by Trump's aluminum tariffs. The Aerospace Industries Association of Canada did not respond to a request for comment. But its counterpart in the U.S. has voiced concern that American aerospace companies could feel pain.

In March, the U.S. Aerospace Industries Association noted it was deeply concerned about Trump's tariffs on steel and aluminum as it “will raise costs and disrupt the supply chain, putting U.S. global competitiveness at risk.”

“There is also a significant threat for retaliation from other countries towards American made products,” the association noted in a statement.

Canada is the largest exporter of aluminum and steel to the U.S.

http://nationalpost.com/news/politics/trade-dispute-could-leave-u-s-firms-out-of-the-running-to-sell-military-equipment-to-canada

On the same subject

  • Military plans to create Canadian Space Division in coming weeks

    July 18, 2022 | Local, Aerospace

    Military plans to create Canadian Space Division in coming weeks

    The division would be responsible to the Royal Canadian Air Force commander for the generation of space capabilities for various missions.

  • Arctic Offshore Patrol Ship fleet to fully operational in 2025, says DND

    April 25, 2019 | Local, Naval

    Arctic Offshore Patrol Ship fleet to fully operational in 2025, says DND

    DAVID PUGLIESE, OTTAWA CITIZEN The Canadian Forces and Department of National Defence has updated the status of a number of its major procurement programs including the Arctic Offshore Patrol Ships which it says will be fully operational by 2025. Under the schedule the first ship is to be delivered sometime this summer to the Royal Canadian Navy but won't be operational until 2020, according to the update. Other ships will follow over the years with the fleet being declared fully operational in 2025, according to the schedule. Each ship will go through various tests and sea trials, with ships being brought on line as those are finished and crews are trained. The Arctic Offshore Patrol Ships, or AOPS, being built by Irving Shipbuilding, were announced in 2007 by then prime minister Stephen Harper. The vessels were supposed to be in the water by 2013. But the program has faced delays. Critics have also questioned why Canada is paying around $400 million per ship when Denmark received similar vessels for $70 million each. In November 2018 the Liberal government announced it was building a sixth Arctic patrol ship to add to the five originally commissioned from Irving Shipbuilding. But it acknowledged that ship will cost taxpayers $800 million — double the price-tag of each of the other vessels. The Liberal government announced the construction of the sixth AOPS after a push by Irving and its employees for additional work. The project was originally to build five AOPS and only proceed with a sixth if Irving could find savings and work within the existing budget. That didn't happen, Department of National Defence officials noted. https://ottawacitizen.com/news/national/defence-watch/arctic-offshore-patrol-ship-fleet-to-fully-operational-in-2025-says-dnd

  • US Navy champions digital weaponry as decider of future fights

    December 3, 2023 | Local, Naval

    US Navy champions digital weaponry as decider of future fights

    "The challenges inherent to the cyber domain are considerable," the Navy secretary wrote, "but failing to mitigate cyber risks is not an option."

All news