Canadian auto parts maker Linamar Corp., once thought to be a casualty of U.S. President Donald Trump’s tariffs on cars and metals, says it’s now a possible beneficiary of the trade war.
“Virtually everything” Linamar ships to the U.S. is exempt from tariffs because the parts comply with the US-Mexico-Canada trade deal, Executive Chair Linda Hasenfratz said during a May 8 conference call with analysts.
As a result, Linamar took over about C$200 million ($144 million) in contracts from other suppliers in the first quarter, according to its earnings presentation. The U.S. has imposed tariffs on components made outside the USMCA zone.
“We think the company could actually be an auto tariff winner as it gains takeover work” from manufacturers looking to move production to the U.S., Scotiabank analyst Jonathan Goldman wrote in a note to clients late May 7.
“OEM customers buying offshore are paying a premium and looking to resource those parts, creating an opportunity for Linamar as a North American source,” Linamar said in its earnings report.
Read more: Live updates on tariff news and impacts
Interactive map: Auto manufacturing sites in Canada, the U.S. and Mexico
Trump’s tariffs on metals and auto parts have had little effect on Linamar’s bottom line, Hasenfratz said, and her greater concern is for automakers themselves. Increased costs for offshore parts put upward pressure on prices, “which obviously would impact consumer demand and impact all of us,” she told BNN Bloomberg Television.
Linamar’s full-year light-vehicle expectation for North America was decreased by 9.3 per cent. However, the supplier said its first-quarter regional content in North American vehicles increased by 1.4 per cent to C$300.79 per vehicle.
On May 8, TD Cowen analyst Brian Morrison upgraded his recommendation on Linamar’s stock to buy from hold, citing those opportunities.
The stock was up 10 per cent at C$58.44 at 2:44 p.m. ET in Toronto on May 8, hitting its highest level since Jan. 31. It closed at C$57.99, up 9.25 per cent.
Guelph, Ontario-based Linamar saw its share price drop 25 per cent between Jan. 30 and April 8 as Trump imposed tariffs on U.S. imports from Canada and Mexico. The stock has now recovered nearly all of those losses.
Linamar, which also makes industrial equipment for agriculture and construction, reported first quarter adjusted earnings on May 8 evening that beat analyst estimates. It also hiked its quarterly dividend by four Canadian cents.
Linamar Corp. of Guelph, Ont., is 56th on the Automotive News Top 100 Global Suppliers List, with US$4.8 billion in sales in 2023. The latest list is set to be released later this year.
