*

Canada consulting on retaliatory duties on C$125 billion

worth

of U.S. goods

*

US President Donald Trump to enact reciprocal tariffs on

April 2

*

Canadian aerospace group asking for removal of some US

products

from counter-duties but not a sector-wide exemption

By Allison Lampert

MONTREAL March 25 (Reuters) - Escalating U.S. tariffs

and Canadian retaliatory duties could raise costs on items from

aircraft components to engine repairs, according to aerospace

trade groups in Canada, as a fresh round of the U.S.-led trade

war looms.

U.S. President Donald Trump's administration is set to enact

reciprocal tariffs on trading partners on April 2, widening a

dispute that has already slapped 25% duties on steel and

aluminum imports to the U.S., sparking retaliation from Canada.

While reports suggest some sector-specific goods would be

excluded, counterstrikes are already being weighed, with Canada

consulting domestic industries on proposed retaliatory tariffs

on C$125 billion ($87.31 billion) of U.S. goods.

Melanie Lussier, president of the trade group Aero Montreal,

said Canada's proposed counter tariffs cover certain U.S.-made

items like sensors that would be difficult to source elsewhere,

since parts must be certified to meet safety requirements.

Aerospace companies are set to discuss the prospect of being

squeezed by duties from both countries at an industry supply

chain summit on Tuesday in Montreal.

"It could be really catastrophic, a rise in costs, loss of

productivity, a loss of competitiveness," Lussier told Reuters

in an interview last week. "In the end, everyone will pay more,

both Americans and Canadians and it's the passengers who will

suffer."

Lussier said Aero Montreal is not seeking an exemption to

proposed Canadian counter duties but would like to see some U.S.

products removed from the list.

Aerospace contributed nearly C$29 billion to Canadian GDP in

2023.

Finding counter-tariffs that hit the U.S. but avoid harming

domestic industries has been a challenge. The European Union

delayed 50% tariffs on U.S. bourbon, wine and toilet paper after

Trump threatened 200% duties on European spirits.

New Canadian Prime Minister Mark Carney, who called a snap

election on Sunday, has acknowledged there is a limit for

dollar-for-dollar retaliation given Canada's smaller economy.

Canada's innovation ministry said the government is taking

steps to mitigate the impact of countermeasures on Canadian

workers and businesses and is considering requests for

exceptional relief.

Despite closely-integrated supply chains, aerospace has

generally not been hard hit yet due to long lead times on

purchases and compliance with the United States-Mexico-Canada

(USMCA) trade deal negotiated during the first Trump

administration.

Bombardier's CEO said recently that existing U.S.

tariffs on aluminum and steel, along with retaliatory measures

introduced by Canada on items like those metals and adhesives,

have had minimal impact on the Canadian business jet maker.

But AeroDynamic Advisory analyst Kevin Michaels warned

tariffs on aluminum alone would cost the industry at least $500

million.

Existing tariffs, combined with fresh duties, could also

raise costs on engine maintenance in North America, at a time

when space at Maintenance, Repair and Overhaul shops is

constrained by demand, the Aerospace Industries Association of

Canada said.

"Current tariffs and any new tariffs imposed will provide

additional costs for MRO providers in both Canada and U.S. and

impact cross-border supply chains," said AIAC CEO Mike Mueller.

($1 = 1.4317 Canadian dollars)