#CBC: « Could Trump’s commerce battle cripple the U.S. defence trade’s dominance of the Canadian market?  » #Toronto #Montreal #Calgary #Ottawa #Canada


If you learn Defence Minister Harjit Sajjan’s briefing notes, and all the inner warnings he has obtained over the past yr, you’d know that the present commerce combat with the U.S. over metal and aluminum is his nightmare come true.

For European defence contractors, lengthy annoyed with Canada’s penchant for purchasing American, it might be a dream come true.

Multi-billion greenback defence procurement applications — constructing the whole lot from fighter jets to warships to armoured autos — are all closely depending on the value of metal.

Canada’s army has an extended checklist of kit wants, which the Liberal authorities set down in scripting this week on the annual Ottawa arms expo referred to as CANSEC.

Higher costs on already sky-high gear are a given, in gentle of the very fact the U.S. is imposing tariffs of 25 per cent on metal and 10 per cent on aluminum — and Canada is countering them with tariffs of its personal.

Procurement Minister Carla Qualtrough stated the federal authorities has « contingency plans » in place to soak up the affect.

« We prepare for this kind of thing, » she stated. « So, there is money set aside, whether it be for tariffs or for interest rate fluctuations, so we can proceed with our defence procurement should there be additional costs associated because of tariffs or other unexpected circumstances. »

Europe because the reasonably priced different

What Qualtrough is speaking about is the usual monetary contingency that’s constructed into each defence contract.

Whether will probably be sufficient to offset short-term will increase in the price of procurement applications — such because the one for maritime helicopters — that are within the technique of supply over the following few years stays to be seen.

Defence officers warned Sajjan final yr that the sort of motion we noticed Thursday would endanger the united statesshare of the defence market in Canada.

« The Government of Canada buys more military hardware from the U.S. than anywhere else, promoting interoperability and security of supply, » stated the May 12, 2017 evaluation.

« The Canadian government purchases significant defence goods and services from the U.S. ($1.44 billion annual average). Accordingly, any significant cost increase on U.S. defence end products could limit imports to Canada. »

European arms makers at CANSEC made a particular level this yr of emphasizing the affordability of their merchandise in contrast with these from the U.S.

As just lately as three years in the past, Europe’s fighter jet producers — Airbus, Saab and Dassault — had been privately and quietly weighing whether or not it was value it for them to bid on Canada’s full CF-18 alternative given the previous Conservative authorities’s fondness for the F-35 and the Liberal authorities’s courting of Boeing for interim Super Hornets.

Now, a few of these European producers are saying privately that it is an entire new ball sport in Canada.

Boeing, which had its personal bruising commerce combat with the Trudeau authorities over Bombardier, stated time will inform whether or not the commerce combat drives Canadian defence {dollars} to Europe.

« It’s hard to say at this point, » stated Scott Day, Boeing’s worldwide vice-president of communications. « We’re going to watch the impacts, how it affects our business. Boeing stands behind free and fair trade. »

The firm’s high brass, nonetheless, moved shortly Thursday night time to dispel the notion the tariffs would lead to an automated worth enhance.

« Boeing relies on U.S. suppliers for approximately ninety per cent of our end-use aluminum, » stated an e-mail assertion.

« Because of the way we manage that portion of our supply chain, we do not see these steel and aluminum tariffs as having a material impact on our business, though we continue to evaluate the broader impact of these actions on our suppliers and global trading relationships. »

A defence relationship on the ropes

With billions of {dollars} in contracts at stake, each within the quick and long run, Innovation Minister Navdeep Bains stated the federal government can be going to check « the intended and unintended consequences » of the tariff combat on the defence trade.

It will likely be arduous to keep away from the underside line, nonetheless, and firms bidding for Canadian work will need uncooked supplies and provides at the perfect worth.

« Businesses are going to go where they think they’re going to find the best cost-effective solution. They’re going to go where they can be competitive, » stated Bains.

It is completely doable the Trudeau authorities and the Trump administration will be capable of negotiate an finish to their commerce battle earlier than the payments on the actually large ticket gadgets — fighter jets and frigate replacements — begin to come due within the early 2020s.

What is extra vital — and what the Europeans have their eyes on — is the harm being executed to the particular defence relationship that Canada and the U.S. have every nurtured because the early days of the Second World War.

« Let me be clear: These tariffs are totally unacceptable, » stated Prime Minister Justin Trudeau.

« Canadians have served alongside Americans in two world wars and in Korea. From the beaches of Normandy to the mountains of Afghanistan, we have fought and died together. »

Foreign Affairs Minister Chrystia Freeland was much more blunt: « It’s insulting. »

For the Europeans, goals are manufactured from that sort of rhetoric.

Note: « Previously Published on: 2018-06-01 04:00:00, as ‘Could Trump’s commerce battle cripple the U.S. defence trade’s dominance of the Canadian market?

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