Head of Linamar says U.S. tariffs have had ‘minimal impact’ on auto parts maker

Linda Hasenfratz, executive chair at Linamar, discusses earning results in Q1 and the impact tariffs are having on the manufacturing company's production.

The head of one of Canada’s largest auto parts suppliers says that despite months of handwringing over U.S. President Donald’s Trump’s tariffs and how they would impact the automotive industry, her company has been mostly unscathed by them so far.

“It’s obviously been a challenging start to the year with a myriad of different tariffs being announced, rolled back, then announced, so I’m pretty thrilled with where we’ve landed,” Linda Hasenfratz, Executive Chair of Linamar Corp., told BNN Bloomberg in a Thursday interview.

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She said that the Trump administration’s recent decision to shield auto parts compliant under the existing U.S.-Mexico-Canada Agreement (USMCA) from tariffs was “a big relief,” since virtually all of the auto parts they ship to the U.S. fall under the agreement.

“So, overall, minimal impact from the tariffs at the moment,” she said.

Hasenfratz’s comments came a day after Linamar reported first quarter results. The company said normalized operating earnings and margins were both up during the quarter – by 3.4 per cent and 10 per cent, respectively.

Normalized diluted earnings per share rose 6.6 per cent, the company said, and it raised its quarterly dividend to $0.29 per share. Revenue and sales, meanwhile, saw year-over-year declines in the quarter.

Hasenfratz said the drop in sales was mainly due to global market softness, which she said was present even before the threat of tariffs was introduced.

“We’ve had our global teams very focused on operational improvements and cost improvements in a tough environment. Markets are soft and markets are down, that’s why sales are down a little bit, but happily, market share is growing so that’s offsetting a lot of the soft market,” she explained.

“And all that work on the operational side is helping us to drive earnings growth, so I feel very good about the quarter.”

Hasenfratz noted that Linamar was already expecting some auto market weakness to start the year, but demand in the quarter wasn’t hit quite as hard as she had anticipated, despite global trade tensions.

On the industrial side of the business, she said “markets were already tailing down” prior to the start of the quarter.

“The access market was down quite a bit last year, so was the agricultural market, and we were expecting the markets to be down this year, as they are,” she said.

“So, I don’t know that I can blame that on tariffs, I’m sure it is exacerbating the situation, but markets were already anticipated to be down so it’s playing out pretty much as expected and as I say, the key to managing that is really growing your market share.”

When it comes to steel and aluminum tariffs, which remain in place for all exporters, including those in Canada, looking to ship into the U.S., Hasenfratz said that Linamar has long had a system in place with their customers that adjusts for fluctuating metal prices.

“So, every quarter, the price adjusts based on metal market pricing for steel or aluminum with our suppliers and with our customers so there is no impact for us on anything happening on the commodities side on the automotive business,” she said.

“And on the industrial side… where we are using metal, we are generally purchasing it in the same country, so we’re not seeing much in the way of impact there – a little bit from the supply base on the industrial side but pretty minimal.”

Hasenfratz said that the one place she does worry about tariff-related impacts is on the customer demand side, especially amongst Linamar’s core auto parts buyers.

“They are paying metal tariffs, they are paying vehicle tariffs, and they are paying parts tariffs for offshore parts that they’re buying outside of North America,” she said.

“Which starts to weigh on them and therefore potentially pricing, which obviously would impact consumer demand and impact all of us.”