Jet maker Bombardier warns Canada that F-35 review may backfire

The head of Canadian jet manufacturer Bombardier Inc. raised concerns about Canada’s decision to review a contract to buy dozens of F-35 fighter jets from Lockheed Martin Corp., the country’s latest response to the trade war with the US.

“Canceling the F-35s might be a good idea, but we need to think about it,” Bombardier Chief Executive Officer Eric Martel told a business audience in Montreal. “We have contracts with the Pentagon. Will there be reciprocity there?” 

Bombardier has invested in recent years in its defense unit, which converts jets into military aircraft. It has two contracts with the US government, one for communication aircraft and another for surveillance planes.

New Canadian Prime Minister Mark Carney ordered a review of the F-35 purchase agreement, a C$19 billion ($13.3 billion) deal for 88 jets that was finalized in 2023. The deal hasn’t been scrapped, but the government needs to “make sure that the contract in its current form is in the best interests of Canadians and the Canadian Armed Forces,” a defense ministry spokesperson said. 

Earlier this month, President Donald Trump put 25% tariffs on imports on Canadian goods that don’t fall under the US–Mexico–Canada Agreement, and added 25% import taxes to aluminum and steel products. He has repeatedly said he believes Canada should be the 51st US state — a recent poll showed that 90% of Canadians disagree — and members of his administration have taken the Canadian government to task for its low level of military spending. 

“Trump isn’t wrong on everything,” Martel said. “We’ve been hiding behind our big brother for a while, and we’re completely dependent on him militarily.”

In 2023, Canada finalized a deal to order as many as 16 military surveillance aircraft from Boeing Co. as part of an investment worth more than $7 billion, rejecting a competing Bombardier proposal.

The jet maker’s shares have dropped 18% since Trump was elected on Nov. 5, but are still up about 50% over the past year. 

In February, Bombardier set aside its financial outlook for the year because of risk and uncertainty about tariffs. “Not providing guidance is the most responsible thing for us to do,” Martel said at the time. About 60% of Bombardier’s business comes from the US, and its planes are currently built and shipped under the rules of the US-Mexico-Canada Agreement. 

Bombardier has a complicated supply chain that includes manufacturing in US and Mexico with more than 2,800 US-based suppliers across 47 states. US-made parts and systems make up a significant proportion of the cost of its aircraft. 

The Global 7500, the firm’s flagship jet, has wings made in Texas, avionics from Iowa and motors made in Indiana. More than half of its building costs are tied to US manufacturing, but the assembly and finishing are done in Canada, which makes the jet subject to tariffs.

Two-thirds of Canada’s aerospace industry exports depend on the US market, Martel said.

This story was originally featured on Fortune.com