Bombardier stands to benefit from Chinese tariffs on U.S.
July 6, 2018
July 6, 2018
Montreal – Chinese retaliatory tariffs on U.S. products are expected to have mixed impacts on Canada’s agriculture sector but an aerospace analyst says Bombardier stands to gain from duties against U.S. small aircraft.
Richard Aboulafia of the Teal Group says a 25 per cent tariff on aircraft weighing between 15 and 45 tonnes could prompt Chinese buyers to switch to Bombardier Inc. Global business jets from planes made by U.S. producer Gulfsteam.
The result could be Bombardier gaining a bigger piece of the Chinese market, which accounts for about five per cent of global business jet sales.
China says it imposed retaliatory tariffs after Washington imposed 25 per cent duties on US$34 billion of imports from China on Friday.
Aboulafia calls the Chinese action “a shot across the bow” to the American aerospace sector by targeting lower volume airplanes.
An escalation could target Boeing and its popular 737 Max, which would help Europe’s Airbus and its control of the C Series.
He says the U.S. tariffs against China’s aerospace sector makes no sense since the United States enjoys a 17:1 advantage in aerospace trade. U.S. aerospace exports to China were US$16.3 billion in 2017 while imports were only US$956 million.
Bombardier declined to comment on the trade skirmish between the world’s two largest economies.
Soy Canada executive director Ron Davidson says a sharp decrease in soybean prices since trade warnings surfaced outweighs any potential gain in Canadian exports to China.
Canada’s pork sector says it faces increased competition in China from European exports. Canadian sales in the first four months of 2018 decreased to 94,000 tonnes from 125,000 tonnes a year earlier.
That translated into a 30 per cent drop in the value of pork exports to $167 million when factoring in lower prices.