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Trade, Tariffs, and Trump

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apophenia:
Of necessity, the opening posts of this thread will mainly be of a political/economic nature. Profiles and descriptions of alternative procurements begin in Part 4. Forum members less interested in politics and economic policy may wish to jump directly to Part 4.

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Opening Moves in the Trump Tariff War with Canada - Part 1

On 10 Feb 2025, US President Donald Trump's flurry of executive orders imposed his threatened 25% tariff on imported Canadian steel and aluminum. This action contravened the United States-Canada-Mexico Agreement - a revised free trade treaty brought about at Trump's own insistance during his first administration. Under USCMA section 232, ending exemptions to tariffs required 6 months of negotiations. Under Chapter 31 (Dispute Settlement), Canada could challenge the US for not abiding by the terms of USCMA. But that treaty is scheduled for joint review in 2026 anyway. This was just Trump's first move.

Instead, under incoming Prime Minister Mark Carney, is was decided to simply countervail that 25% tariff. However, special US Trade Negotiation Envoy Chrystia Freeland announced that these tariffs would also extend to all manufactured goods imported from the US which contained a majority of components (by weight) composed of steel and aluminum. At the same time, countervailing duties imposed an effective export-ban to the US of select, strategic mining/smelting products - including: iron ore, alumina, cobalt, nickel, graphite, indium, and lithium. [1]

Simultaneously, was an announcement of revised Public Services and Procurement Canada rules which prohibited procurement contract winners from passing on their new 25% penalties on equipment (or components) made primarily from US steel or aluminum. As was anticipated, one result was hoards of Sparks Street law firms filing suit on behalf of their American corporate clients. However, this outcome had already been anticipated by the Government of Canada (GoC). Ottawa issued a Article XV 6-month notice to withdraw from the World Trade Organization. [2] In the meantime, remaining WTO authority in Canada would be subject to approval by Canada's Supreme Court. [3]

Tariff War Consequences - Intended and Otherwise

With most avenues for legal suits tied off, the GoC instituted its policies for softening the economic damage done to the Canadian economy. As expected, the steepest falls were in the automotive and aerospace sectors. Ottawa expected both sectors to return to core competencies as quickly as possible: Completely cross-border supply-train reliant industries were on their own. In aerospace, Ottawa would focus on supporting MRO, smaller airframers (from Viking to Volatus), and component-makers for existing Canadian aircraft types. Firms reliant on the US market - from CAE to Héroux-Devtek - would take a major hit on lost exports. But the big losers were Montréal-area airframers Airbus Canada (A220 airliner) and Bombardier (Challenger and Global series bizjets) who would receive no bailouts from Ottawa. [4]

The tit-for-tat tariff war resulted in many standing order contracts had become non-compliant under new Public Services and Procurement Canada rules. With so much of modern aerospace dependant upon machined steel and aluminum components, this industry would be hit hardest of all. This would prove doubly true for military procurement contracts held with the Department of National Defence. Not only were many planned import procurements now non-compliant (due to 'unfair' trade practices), US-owned subsidiaries in Canada - like GDLS-C and Colt Canada - were also struggling.

(To be continued ...)

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[1] These countervails would be followed, incrementally, by similar duties on US-destined export chemicals (with potash/KCl being covered by both mineral and chemical rulings) as well as lumber and other forestry by-products.

[2] This would be the last act of Canada's supposedly 'Permanent Mission' to the World Trade Organization before it was formally withdrawn from Geneva.

[3] At the same time, Cabinet readied a Bill which tied any legal action resulting from trade disputes to a successful USCMA Chapter 31 dispute settlement. But Canada's Chapter 31 submission would only be submitted when the US Administration had demonstrated good faith by reversing its contravention of USCMA section 232 and withdrawing its illegal tariffs.

[4] However, both airframers would receive support packages from the Gouvernement du Québec. Overall, the effect was as predicted. Canadian aerospace and defence industry earnings had sat at -4.34% in 2024. By the middle of 2026, they had dropped to -26.75%.

apophenia:
Side-Effects: Procurement Forestalled & Military Disengagement - Part 2

Along with legal threats, the Government of Canada (GoC) also received counter-claims of non-compliance to contracts from various potential suppliers. The first was from Lockheed Martin on behalf of the now-frozen Future Fighter Capability Project. But the GoC already regarded the FFCP contract in arrears and the purchase (and, thus, delivery) of F-35s to Canada was considered 'frozen'. Since this 'frozen' contract and its delivery schedue was, effectively, in limbo, the Supreme Court refused to hear submissions from LM's legal representatives. This claim/counter-claim dance established a pattern in planned procurements from US military suppliers.

Lockheed Martin's attempted legal actions, pushed forward a scheduled debate in the House of Commons on a proposed Canadian withdrawal from the North American Aerospace Defense Command (NORAD). A planned CAD38.6 billion modernisation of NORAD had already been frozen and, now, more than 300 x Canadian personnel in Colorado Springs (including civilian employees and families) were ordered to return to Canada within a fortnight. Another 650 Canadian NORAD personnel at home were ordered to restrict communications with their US counterparts. [1]

Shortly after the NORAD 'returns', more RCAF personnel were called home. This included seconded RCAF members lodging with USN and USAF units as well as instructor and trainee pilots taking part in the so-called Bridge FLIT on USAF T-38 Talons at Sheppard AFB in Texas. The latter withdrawal would have gone all but unnoticed in the US but Washington was not all that happy with Canada's threat to restrict American military access to the Canadian Arctic should the NORAD agreement be officially terminated. [2] And there was more to come.

The Trump Administration continued issuing threats to NATO members spending less than 5% of their GDP on defence procurement. Canada - which spent 1.29% of a promised 2% GDP on defence in 2024 - was in the middle of those crosshairs. Plans had been put in place to raise that number to 1.7% by 2029-30 but there was simply no widespread Canadian political support to actually raise defence spending to 2% quickly ... let alone to spend 5% of Canada's rather substantial GDP. [3] (If anything, Trump's tariffs had made average Canadians even more reluctant to spend on defence.)

Rather than respond directly to US 5% spending demands, the GoC struck another House of Commons All-Parties committee to consider the ramifications (and potential benefits) of Canada withdrawing from NATO. When this official review of Canada's continued membership in the alliance was announced, the expected volley of threats and derisive comments sallied forth from officialdom in Washington, DC. At the same time, however, Ottawa announced its signing on with a new defensive agreement among NB-8 nations. Canada would sign on to BALTS - the Baltic Agreement on Logistics and Tactical Support - as a 'partner force' rather than as an official component of Canada's NATO membership. Nonetheless, membership in BALTS was seen as helping to secure the originally-NATO Canadian deployments to Latvia. Within BALTS, Canadian Armed Forces personnel would later also deploy to Sweden.

Establishing a 'partner' relationship outside of NATO was also the approach used when Canada joined the UK-led Joint Expeditionary Force (JEF). [4] Signing on for JEF was intended to make better use of the RCN's newly-commissioned Protecteur class JSS - which would act as a 'mothership' and AOR for RCN flottila's deploying to the Baltic. This meshed with Halifax class FFHs deployed to bolster a Polish initiative to increase Baltic Sea patrols. There, Canada was also able to leverage its Arctic Autonomous Underwater Vehicle experience, using ISE Explorer class AUVs to monitor Baltic undersea cables. [5]

The GoC was sending mixed messages on military commitment ... and that was quite intentional.

(To be continued ...)

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[1] Further orders followed which eliminated all airshow appearances as well as combined air exercises by the RCAF and USAF. Similarly, the Canadian Navy and Canadian Coast Guard were to cancel all scheduled exercises and cooperative operations conducted with the US Navy and US Coast Guard.

[2] With Canadian Armed Forces participation in NORAD reduced to an absolute minimum, Ottawa never needed to proceed with a notice to withdraw from the pact. A similar approach would be taken to Trump's demands for NATO members to spend 5% of their GDP on defence procurement.

[3] See: The Fiscal Implications of Meeting the NATO Military Spending Target, PBO, Ottawa, 30 Oct 2024.
-- https://www.pbo-dpb.ca/en/publications/RP-2425-020-S--fiscal-implications-meeting-nato-military-spending-target--repercussions-financieres-atteinte-cible-depenses-militaires-fixee-otan

[4] Ottawa regarded membership in BALTS as part-and-parcel of joining the UK-led Joint Expeditionary Force. However, a full commitment to JEF had to wait until British PM Keir Starmer had exhausted all hope of establishing a 'special relationship' with Donald Trump. A looming Canadian constitutional crisis regarding the Monarchy was averted when lengthy delays in fixing a date made clear that this proposed "second state visit" would never occur. Shortly thereafter, Canada joined the UK-led Joint Expeditionary Force.

[5] This monitoring role was rather different from the Persistent Maritime Surveillance approach used in Canada's Arctic waters. In the Baltic, Explorer AUVs were used both for active patrols along undersea cables as well 'hibernating' along those lines (to save battery life), 'reviving' only when certain  activities (such as anchor-dragging) was detected.

apophenia:
Rapid Revision - New Realities in Military Procurement - Part 3

Although overall relations between the GoC and The Boeing Company had been poor for some time, DND had managed to push through a P-8A Poseidon purchase to fill its Canadian Multi-Mission Aircraft (CMMA) requirement. More than CAD8 Billion was committed to buy up to 16 x Poseidon to replace in-service RCAF CP-140M Aurora patrol aircraft. But, within 6 months, DND was asking for another CAD5 Billion to cover the cost of airborne early warning (AEW) aircraft. [1] However, the GoC response to Trump's steel and aluminum tariffs would scupper both of these procurement plans. [2]

With multiple Project Management Offices at NDHQ thrown into turmoil, Parliament began planning for subsitutes and interim solutions to Canada's procurement issues. The first move was to separate the Standing Committee on National Defence (NDDN) from shorter-term procurement planning. This would become the purview of a newly-established Standing Committee on Defence Procurement (DPAMD). [3] Within a climate of aggressive US tariffs and 'jokey' mentions of a '51st State', DPAMD proved much toothier than the NDDN of old. This was reflected in the DPAMD's priority recommendations for the CMMA programme and the AEW requirement.

Interim Solutions for Insoluable Problems

The new Standing Committee on Defence Procurement's first proclamation was that interim procurements were to be pursued on the most pressing issues. Interim procurement choices would be weighted on general requirement fit, overall cost (now assuming only 10 years of active service), deliverability (with speed of that delivery as a subset), reliability of supplier(s), and the percentage of 'Canadian-Content'. The first interim procurement project sought to fill in for both the Canadian Multi-Mission Aircraft programme and the Airborne Early Warning aircraft project. However, with the CP-140M Aurora fleet having been recently upgraded, the order of priority for the AEW and CMMA would be reversed within the interim procurement plans.

Since procuring anything from Boeing was out of the question for the moment, the scope of the AEW requirement would also be scaled back. This approach resulted in what became DND's iCMMA-ISR project for an Interim Canadian Multi-Mission Aircraft specialised in the Intelligence, Surveillance, and Reconnaissance role. A small procurement was planned and commonality with new maritime patrol airframes was highly valued. That was not quite as restrictive as it sounds, since the MPA requirement was now also to be divided between coastal (ie: East, West, and Arctic) and open-ocean patrol (ie: ensuring the sealanes between Eastern Canada and Iceland. [4]

(To be continued ...)

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[1] Just as the CMMA requirement had been written around the desired P-8A, RCAF AEW plans were also created around a related Boeing airframe - the E-7 Wedgetail.

[2] Canada's recent Defence Policy Update also covered proposed procurements of 88 x F-35A fighters, 9 x CC-330 Husky Multi-role Tanker Transports, and 11 x MQ-9B SkyGuardian UAS. Of these plans, only the underway delivery of Airbus A330-based CC-330s would be uneffected.

[3] Within Hansard and GoC documents, DPAMD stood for the (Standing Committee on) Defence Procurement/(Comité permanent des) achats de matériel de défense. Despite its reduced scope, DNND still stood for the (Standing Committee on) National Defence/(Comité permanent de la) défense nationale.

[4] Britain's RAF would retain responsibility for patrolling the rest of the so-called 'GIUK gap'.

apophenia:
Interim ISR as the new AEW Procurement - Part 4

As DND's proposed CAD5B (USD 3.65B) AEW&C aircraft acquisition was folded into the new Interim Canadian Multi-Mission Aircraft - Intelligence, Surveillance, and Reconnaissance (iCMMA-ISR) project, it was also simplified. With the future of air defence cooperation with the USAF in question, the NORAD component of the AEW&C requirement was quietly dropped. So too was a demand for 'interchangeable' with former 'Five Eyes' allies (originally written into the spec to favour the desired Boeing E-7A Wedgetail platform). This all but ensured the success of Saab's Bombardier Global 6000-based iCMMA-ISR submission.

From a Canadian procurement perspective, having only one option was even worse than having too many. No-one doubted the excellent characteristics of the Saab GlobalEye as a submission for the AEW component of iCMMA-ISR (aka 'iCMMA-1'). However, it was the mandate of Public Services and Procurement Canada to oversee a fair and transparent cometition - not a single-sourcing contract award. From PSPC's point-of-view, a surprise last-minute 'iCMMA-1' submission by Marshall Aerospace Canada was a God-send. Now that Saab faced a rival candidate, a proper iCMMA-ISR/AEW competition could be run.

Project Dolphin Goes to the Great White North

As the name of the Marshall Dolphin submission suggests, this submission was derived from the Project Dolphin aircraft developed by QinetiQ and the Marshall Aerospace and Defence Group for the United Arab Emirates. Project Dolphin was based around the same Bombardier Global 6000 airframe as the Saab submission. The difficulty was that Project Dolphin was a Elint/Sigint platform rather than an early warning type. Thus, the challenge for Marshall Aerospace Canada and its 'Team Dolphin' partners was to convince DND and the RCAF that their submission could be quickly and successfully re-equipped for the AEW/ISR roles demanded for the iCMMA-ISR requirement.

Marshall Aerospace Canada saw value in having a Project Dolphin demonstrator aircraft appearing at the air shows in Canada. Once its parent firm and the 'Team Dolphin' partners were convinced, a Global 6000 conversion was flown over from Cambridge, UK. Such was the hast that this demonstrator wasn't even painted for its appearance at the Comox Armed Forces Day show. [1] However, the somewhat scruffy-looking demonstrator had served its purpose - generating a 'buzz' in the Canadian media (including Canada's aviation press) and amongst RCAF personnel. Had 'Team Dolphin' been presenting a true AEW/ISR platform, their air show appearances would have been a tough act to follow. But Saab proved up to the task.


Top: Team GlobalEye's Saab GlobalEye 'iCMMA-1' demonstrator based on a Bombardier Global 6000 bizjet. (Saab assumed that any winning submission would be based on new-production Global 6500 airframes.)

Bottom: Team Dolphin's 'iCMMA-1' demonstrator also based on a converted Bombardier Global 6000 bizjet. (The Marshall Dolphin submission was for an appropriately-equipped AEW platform but the Dolphin demonstrator was actually fitted-out for the SIGINT role.)

Saab GlobalEye - Demos and Curve-Balls

Playing catch up, 'Team GlobalEye' also dispatched a demonstrator airframe to Canada. As with the Project Dolphin, the Saab GlobalEye conversion was also initially unpainted. The key difference was that the GlobalEye demonstrator was a fully-functioning early warning platform ideally suited to the 'iCMMA-1' requirement. But 'Team GlobalEye' had another move to make in what was already an unfair fighter - they were offering immediate RCAF access to GlobalEye airframes. With that offer, 'Team GlobalEye' had effectively clinched the 'iCMMA-1' deal.

Deals and offers aside, the Saab GlobalEye AEW&C aircraft had merits of its own. Obviously, it was based upon a Canadian-made airframe - the Bombardier Global 6000. Mounted above that platform was a cabin-top Ericsson Erieye ER (Extended Range) AESA radar system (as well as other sensors and EW equipment). At altitude - even while still flying in Swedish airspace - the performance of the Erieye ER radar system was impressive. With it, GlobalEye could monitor Russian naval activity as far away as Kaliningrad or St. Petersburg [2] But, of course, most GlobalEye missions were actually flown well out over the Baltic Sea, extending the Erieye ER's surveillance range considerably further into Russian territory.

As a 'partner force' participating in BALTS (the Baltic Agreement on Logistics and Tactical Support), RCAF personnel had been exposed to Swedish Flygvapnet operations with the GlobalEye. Now the RCAF was being offered hands-on experience. In a nutshell, the 'Team GlobalEye' offer consisted of  components. The first was combined-crew training with Swedish personnel at Malmen AB (outside Linköping). The second was the loan of operational GlobalEye for RCAF use within BALTS. Those 'loaners' would then be replaced by new GlobalEye conversions specifically tailored to meet iCMMA-ISR specifications. Such terms proved impossible to resist. The 'loaner' GlobalEyes entered RCAF service as their new Saab CE-260A Sentinelle multi-mission ISR type. [3]

(To be continued ...)

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[1] After its Comox appearance, C-GEWA flew on to Southport for the Manitoba Air Show. Upon its return to YXX, the demonstrator would be rolled into the paint shop of another Abbotsford-based 'Team Dolphin' partner - Cascade Aerospace - where it was sprayed in an RCAF-mimicking 2-tone grey scheme which cleverly integrated a dolphin theme on the fuselage. This paint job was only completed the evening before the aircraft's display flight at the Abbotsford International Air Show.

[2] From 9,100 m (30,000 feet) above Visby (on Gotland), GlobalEye could monitor Russian surface ships in Baltiysk harbour and air traffic over all of Kaliningrad Oblast. At 10,000 m (35,000 feet) above Stockholm, the Leningrad Naval Base at Saint Petersburg and nearby Levashovo AB could be surveilled.

[3] The 'loaner' CE-260A Sentinelles were assigned to 420 (Snowy Owl) Squadron RCAF which was reformed for the purpose. No 420 operated as a lodger unit alongside 74:e specialflygskvadron - the Flygvapnet's GlobalEye-equipped unit - at Malmen AB (ESCF) at Malmslätt, Linköping, in south central Sweden. There, 420's Sentinelle operated as part of BaltPat (Baltic Patrol Force), an aerial compenent of BALTS.

apophenia:
'Medium MPA' - the First Interim CMMA Contest - Part 5

The maritime patrol component of Canada's Interim CMMA (iCMMA) Project to replace the RCAF's aging-out CP-140M Aurora fleet came in two parts. The first component (aka 'iCMMA-2') would be the 'medium' airframe MPA type  - now heavily-weight in favour of a Bombardier Global 6000 base due to AEW 'iCMMA-1' having been satisfied by the Saab GlobalEye. This 'iCMMA-2' was considered a 'medium MPA' but would emphasise sovereignty patrol over the ASW role as well as taking over most of the CP-140s' ISR duties. Any 'medium MPA' would be restricted in capabilities (as compared with the larger in-service CP-140M or its planned 'iCMMA-3' replacement. But the Saab GlobalEye procurement had made the 'iCMMA-2' component the low-hanging fruit.

Although the chosen platform for 'iCMMA-2' was a foregone conclusion, the industrial mix was unexpected. A modelling exercise performed by the National Research Council (NRC) - with the assistance of the Defence Research and Development Canada (DRDC) - had suggested that the best results could be had by combining the features of the two anticipated submissions. Those were the front-running Saab Swordfish and the domestic PAL Aerospace P-6 MPA proposal. As a result of the NRC/DRDC studies, NDHQ requested that the rival groups - Team Swordfish and Team Global Patrol - to work together on a joint submission.

"When you're with me, baby, the skies'll be blue"

Under the new scheme, Team Swordfish - led by Saab AB and Bombardier Aviation - would be lead contractor and systems integrator while Team Global Patrol - led by PAL Aerospace and De Havilland Canada - would be responsible for the design and construction of the ventral 'pannier'. Although this alliance eliminated much of the open competition from the 'iCMMA-2' contest, based on technical merit gauged by DND, Public Services and Procurement Canada was prepared to give a waiver on competition. The result was a Swordfish/P-6 MPA hybrid jointly submitted for 'iCMMA-2' by Saab and PAL. This submission was accepted and entered RCAF service as the Bombardier CP-260B Baffin.

In effect, the CP-260B Baffin was essentially a Saab Swordfish fitted with PAL's longer ventral 'pannier' which incorporating both search radar radome and a small weapons bay. Less noticeable was that, under DND instruction, the platform shifted from new-production Global 6500 airframes to refurbished Global 6000s. The latter were trade-ins to Bombardier which were stripped and rationalised before conversion to full CP-260B Baffin standards. The first Baffin 'B' production conversions entered service with 415 Long Range Patrol Force Development Squadron at CFB Greenwood, NS.

Bottom: Saab CE-260A Sentinelle AEW/SIGINT aircraft of No 420 (Snowy Owl) Squadron RCAF, Malmen AB, Sweden. [Inset] 420's Snowy Owl emblem as emblazoned on the CE-260A's winglet.

Top: Bombardier CP-260B Baffin 'medium MPA' assigned to the 415 Long Range Patrol Force Development Squadron for service trials at CFB Greenwood. Note the Saab 15 Spear anti-ship missile hung from the underwing pylon. [1]

(To be continued ...)

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[1] In Swedish service, these missiles are known as the RBS 15 Mk.IV Gungnir. Gungnir, the spear of the god Óðinn in Norse mythology, was known to always strike its target.

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