Impact of U.S. tariffs on auto industry overblown: analyst
U.S. steel and aluminum tariffs aren’t having “the dire impacts” predicted for the Canadian auto sector, an analyst said, suggesting losses, if any, are minimal and are being overblown.
Cormark Securities analyst David Tyerman, who covers the two largest manufacturers of auto parts in Canada — Magna International and Linamar Corporation — said the sector’s largest companies haven’t seen a significant impact to their bottom lines since U.S. President Donald Trump imposed tariffs of 25 per cent and 10 per cent on steel and aluminum respectively on May 31.
The real danger, Tyerman said, was that Trump would make good on his threat to impose auto tariffs of 25 per cent on the sector. The threat led to uncertainty, but the USMCA trade deal that the U.S.
and Canada signed in September eliminated that risk. “It just doesn’t make that much of a difference,” he said. “It would be good if they weren’t there. It might bring the price (of the commodities) down a little bit, but the reality is it doesn’t gigantically change the equation of the overall economy.”
The main reason, Tyerman said, is because companies like Linamar and Magna receive rebates that cover as much as 100 per cent of the tariff charges from the federal government if they import steel and aluminum from the U.S. and export it back out.