Bombardier stock will come under pressure when markets reopen after the long weekend as investors react to the new threat from President Donald Trump. This comes at a time when it remains in a bear market after falling by 27% from its highest point this year. Still, there are several reasons why Trump’s threat will not have a major impact on the company.
President Trump cannot just ban Bombardier
In a Truth Social post on Monday, President Trump announced that the US will prevent Bombardier from selling its jets in the United States as the trade war with Canada escalated.
Trump argued that Canada was unfair to the United States, repeating his claim of the large trade deficit that the US has with the country. He also noted that Canada delayed the approval of Gulfstream.
Trump was right to note that the US is the biggest market for Bombardier, and a ban would have major implications on its business.
However, the question is whether Trump can use his presidential power to ban Bombardier from selling its planes in the United States. For one, the FAA has already certified all Bombardier planes that are sold in the US. Also, the planes comply with the USMCA deal that Trump negotiated in his first term. USMCA was passed by the Senate and signed into law, meaning that he would need congressional approval to ban it.
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Most importantly, Bombardier, if banned, may use the legal system to overturn it. Trump has already had major losses in the Supreme Court, including on tariffs.
Additionally, Canada would respond by banning US jets by companies like Boeing and Gulfstream, which is owned by General Dynamics.
Bombardier has a large US presence and buys US parts
Most importantly, Bombardier has a large presence in the United States, with over 1,000 employees in the country. It also uses many US suppliers, who would be hurt if its business slows down.
The company uses engines made by companies like Pratt & Whitney, GE Aerospace, and Honeywell. All these are American companies. It also uses products from companies like Collins Aerospace, Parker Hannifin, TransDigm Group, RTX, and Parker Aerospace.
As such, banning Bombardier would have a big impact on US business, which raises the possibility of a TACO moment. TACO stands for Trump Always Chickens Out.
The most recent earnings report showed that Bombardier’s business continued growing steadily. Its revenue rose from $2.03 billion in the second quarter of last year to $2.15 billion in the second quarter of this year. Most of this revenue comes from its manufacturing segment followed by the services.
Its profits also continued to rise, with the adjusted EBITDA moving to $325 million from $297 million in the same period last year.
Bombardier stock price analysis
Bombardier stock chart | Source: TradingView
The daily chart shows that the Bombardier share price has remained in a bear market in the past few weeks. It dropped from a high of $378 in July to the current $311.90. It moved below the lower side of the ascending channel.
The stock has remained below the 50-day moving average and the Major S/R pivot point of the Murrey Math Lines too. Looking forward, the stock will likely resume under pressure as investors react to Trump’s threat. It will then bounce back, possibly to the strong pivot reverse level of $343 as the fears ease.
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