The Canadian auto parts manufacturer Linamar Corp. has revealed that instead of being harmed by the tariffs imposed by President Donald Trump, it may now benefit from the trade war. According to the CEO, Linda Hasenfratz, almost all the parts that Linamar ships to the United States are tariff-free thanks to the trade agreement between the United States, Mexico, and Canada.
During the first quarter, Linamar secured contracts worth around 200 million Canadian dollars with other suppliers, as "practically everything" they send to the United States is exempt from tariffs. The company, based in Guelph, Ontario, also manufactures industrial equipment for agriculture and construction and has seen an increase in its adjusted first-quarter earnings, exceeding analysts' expectations.
According to Hasenfratz, the rising costs of imported parts could put upward pressure on prices, which would affect consumer demand. Despite a 25 percent decline in the stock price between January and April due to the tariffs imposed by Trump on imports from Canada and Mexico, Linamar has nearly recouped those losses.
Analysts like Jonathan Goldman from Scotiabank believe that Linamar could benefit from automotive tariffs by obtaining contracts from manufacturers looking to shift their production to the United States. In line with these projections, Brian Morrison from TD Cowen upgraded his recommendation on Linamar's stock from "hold" to "buy."
Linamar's shares rose by 10 percent in Toronto, reaching their highest level since January. Hasenfratz stated that Trump's tariffs on metals and auto parts have had little impact on the company's earnings, and her primary concern focuses on automobile manufacturers. Additionally, Linamar has increased its quarterly dividend by four Canadian cents.