President Donald Trump’s decision to halt trade talks with Canada raises fresh uncertainty about the potential for the USA to impose new or steeper tariffs on aerospace products and raw materials.
While the president has not threatened to withdraw exemptions now enjoyed by Canadian aircraft manufacturers, he did on 27 June warn that higher duties on unspecified Canadian products may be coming.
“We are hereby terminating all discussions on trade with Canada, effective immediately,” Trump posted to his Truth Social account on 27 June. “We will let Canada know the tariff that they will be paying to do business with the United States of America within the next seven-day period.”
Trump’s volley of tariffs this year have included a 25% import duty that the USA on 4 March imposed on Canadian products.
Notably, however, aircraft have so far been exempt from the taxes; they are among products specified as duty free under the US-Canada-Mexico agreement (USMCA), which Trump negotiated during his first term and which he has so far kept in place.
That exemption has been valuable to Canadian companies like Airbus and Bombardier, enabling them to sell tariff-free Canadian-made jets to US buyers. Airbus makes A220s near Montreal (and also in the US city of Mobile) and Bombardier assembles Global and Challenger business jets in Canada.
Trump also this year slapped a 50% duty on aluminium and steel imports, including from Canada, which supplies the “raw aluminium” US firms use to produce aerospace-grade aluminium.
While Trump is now threatening to hit Canada with more tariffs, neither he nor his administration have said what products might be subject to new duties. Trump has not signalled an intention to scrap provisions of the USMCA, nor has he talked of hiking the aluminium tax. Also, Trump has a history of using such statements as negotiating leverage and of backing down after receiving concessions.
Trump’s social media post cites Canada’s “digital services tax” as the reason the USA backed out of trade talks. Under that measure, which took effect on 28 June, Canada taxes large foreign and domestic companies on revenue earned from digital services including social media.
The US aerospace industry, including large foreign-owned players like Airbus, have lobbied the Trump administration against imposing tariffs on aerospace products. Executives have attributed the US industry’s strength to a decades-long tariff-free environment and have noted that the USA is a net exporter of aerospace products and therefore helps correct alleged trade imbalances.
