TORONTO — The chief executive of Canada’s second largest auto parts manufacturer called the Trump administration’s controversial steel and aluminum tariffs “ridiculous” and said the “punitive and frankly illegal” measures would be harmful to American jobs and industry.
Speaking on a conference call with analysts on Wednesday afternoon after reporting fourth-quarter results, Linamar CEO Linda Hasenfratz said that, while it was difficult to comment on the overall impact of the proposed tariffs given further details have yet to be revealed, it would be harmful to the U.S.
“Adding costs to building products in North America, whether through an elimination of NAFTA and move to WTO trade tariffs or through punitive and frankly illegal steel and aluminum tariffs, hurts all of us, but mainly Americans and American jobs,” Hasenfratz said.
“(This) is information we need to keep reiterating to the American administration. We hope that rational decision-making and cooler heads will somehow prevail.”
Late Wednesday, White House spokesperson Sarah Sanders revealed that Canada may receive a special exemption from Trump’s steel and aluminum tariffs, which were hastily announced last week. “There are potential carve-outs for Canada and Mexico based on national security — and possibly other countries as well, based on that process,” Sanders said. “That would be a case-by-case and country-by-country basis.”
The steel tariffs in particular could impact Linamar, which purchases forged steel from American suppliers, but Hasenfratz said the company would be partially protected by coverage within existing contracts with suppliers. She said some of the company’s steel forging contracts will make it difficult for suppliers to increase their prices as a result of tariffs.
“My concern comes from … that the (original equipment manufacturers) take on all this cost and have to pass it on to the consumer and the results may impact demand,” she said.
“I also think it’s kind of ridiculous, because what the president is doing is disadvantaging his own manufacturing companies. It’s almost (incentivizing) you to manufacture outside of the United States and buy your raw materials outside the U.S. because they are going to be massively cheaper.”
Trump had previously said that the U.S. wouldn’t lower tariffs unless Canada and Mexico agreed to a revamped NAFTA agreement.
Hasenfratz reiterated her support of the NAFTA agreement, and encouraged the Canadian, American and Mexican governments to remain committed to the free trade deal going forward.
“I think at its simplest, the argument that more than $500 billion of U.S. exports to Canada and Mexico are at risk in the absence of NAFTA is very powerful for our U.S. friends. That represents millions of U.S. jobs,” she said.
The Guelph-based company hit record sales in 2017, with net earnings coming in at $549.4 million, up from $522.5 million in 2016. Sales jumped 14.5 per cent to $6.5 billion.
Linamar reported quarterly sales in the three-month period ending Dec. 31 of $1.57 billion, up from $1.37 billion for the same time a year earlier. It reported adjusted net earnings of $120 million in the quarter, or $1.81 per diluted adjusted share, compared to $116.1 million, or $1.76 per diluted adjusted share, at the same time last year.
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