The possible expansion of US tariffs on steel and aluminum to include vehicles and auto parts could cost car manufacturers billions and disrupt production, according to Linamar Corp., Canada’s publicly traded auto parts supplier.
The warning follows US President Donald Trump’s decision to impose a 25% tariff on most Canadian imports on Tuesday.
In response, Canada announced C$30 billion in tariffs on US exports.
While these measures target multiple industries, the automotive sector faces significant risks. Bloomberg reported that Trump temporarily exempted vehicles and auto parts made under the North American trade agreement from the new tariffs for one month after industry appeals.
During a call with analysts following Linamar’s fourth-quarter earnings report, executive chair Linda Hasenfratz said extending tariffs to automotive goods could lead to production shutdowns.
Customers continue to place orders with Linamar’s Canadian and Mexican facilities, but further tariff escalation could force operational halts.
The US metals tariffs are scheduled to take effect on March 12.
Based in Guelph, Ontario, Linamar operates most of its facilities in Canada, primarily serving the US market. Despite the tariffs, the company is not planning to shift production to the US.
Hasenfratz told BNN Bloomberg Television that long-term business decisions should not be based on short-term policy changes, citing the frequent shifts in trade policies.
The uncertainty surrounding tariffs has affected auto sector stocks. Linamar’s share price has dropped about 11% this year.
Magna International Inc., Canada’s auto parts maker, saw its shares fall to their lowest level in nearly five years on Tuesday, with a year-to-date decline exceeding 12%.
North American automotive supply chains have been integrated since the 1960s. Hasenfratz said dismantling these networks due to tariffs would require substantial investment without improving efficiency or vehicle quality. She added that collaboration between companies in the US, Canada, and Mexico has supported technological advancements and improved production processes.
Linamar expects sales to decline across several divisions. The company forecasts double-digit sales declines in its agricultural equipment segment and high single-digit declines in commercial access vehicles, including forklifts, in 2025.
According to Bloomberg, these projections remain unchanged even if the US-Canada trade dispute is resolved quickly.
Toronto-Dominion Bank analysts cut Linamar’s price target to C$60 from C$66, citing ongoing tariff-related risks and market share concerns. Analyst Brian Morrison and his team said it would be impractical for Linamar to relocate production to the US in the short term.
Linamar’s stock fell as much as 7% during early trading in Toronto on Thursday, reaching its lowest intraday level since May 2022 before recovering to C$50.67 by 12:06 p.m.
Linamar reported normalized earnings of C$1.82 per share for the fourth quarter, exceeding analysts’ estimates of C$1.57 per share, according to a Bloomberg survey. Quarterly revenue fell to C$2.38 billion from the previous year.
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