U.S. tariffs expected to raise costs for Canada’s aerospace

The ongoing trade war between the U.S. and Canada is expected to impact Canada's aerospace sector significantly. Aerospace trade groups warn that rising U.S. tariffs and Canadian counter tariffs could increase costs for important items like aircraft components and engine repairs. U.S. President Donald Trump plans to impose new tariffs starting April 2. This follows earlier tariffs of 25 percent on steel and aluminum imports, which prompted Canada to retaliate. The Canadian government is discussing potential counter tariffs on $125 billion worth of U.S. goods, but some items may be exempt. Melanie Lussier, president of Aero Montreal, highlighted that certain U.S. products, especially safety-certified parts, are difficult to replace. Aerospace companies in Canada are concerned about the potential impact of tariffs on their operations. Lussier noted that increased costs could hurt productivity and competitiveness, affecting both Americans and Canadians, particularly airline passengers. Aero Montreal is not asking for an exemption from the proposed tariffs but wants to see specific U.S. products removed from the list. In 2023, the aerospace sector contributed nearly $29 billion to Canada's GDP. Finding effective tariffs that target the U.S. without hurting local industries remains complicated. New Canadian Prime Minister Mark Carney acknowledges the challenges of retaliating against larger economies. He mentioned that the government is working to lessen the impact of tariffs on Canadian businesses. So far, existing U.S. tariffs have had limited effects on some companies, like Bombardier, but analysts warn that new tariffs on aluminum could cost the industry over $500 million. The Aerospace Industries Association of Canada expressed concerns that collectively, current and new tariffs will increase maintenance costs and disrupt cross-border supply chains.