As President Trump threatens to raise tariffs to unprecedented levels against China and potentially key allies, some automotive manufacturers are already calculating how they might navigate this new economic landscape. Far from panicking, Canadian auto parts giant Linamar Corporation sees strategic advantages in its positioning under the current USMCA trade framework.
During the company’s recent earnings call, Linamar executives outlined how they’ve already adapted to the previous round of Trump-era trade tensions, and expressed confidence that their North American manufacturing footprint gives them a competitive edge if new tariffs materialize.
“We’ve been through this already,” CEO Linda Hasenfratz told analysts on the call. “When the first round of tariffs hit several years ago, we were able to redirect business and actually grow market share as customers sought North American supply alternatives to their Chinese sources.”
The Guelph, Ontario-based manufacturer, which produces powertrain components, driveline systems and other complex mechanical assemblies, has spent years diversifying its production capabilities across Canada, the United States and Mexico. This trilateral strategy has created what Hasenfratz describes as a “USMCA advantage” that insulates the company from the worst effects of potential tariff shocks.
Linamar reported quarterly revenue of C$2.45 billion, up 4.3% year-over-year, with earnings that exceeded analyst expectations. The company emphasized that about 80% of its automotive components now move exclusively within the North American zone, effectively bypassing many of the tariff concerns that plague competitors with more global supply chains.
Jim Jarrell, Linamar’s President and COO, pointed to specific examples where the company’s positioning paid dividends during previous trade tensions. “When components for electric vehicle systems faced 25% tariffs from China during the first Trump administration, we saw over $40 million in business shift to our facilities in Mexico and the United States,” he noted.
Financial analysts have begun highlighting this “tariff advantage” in their assessments of auto suppliers. BMO Capital Markets analyst Peter Sklar recently wrote that “companies with established USMCA-compliant manufacturing networks will see substantial margin advantages compared to competitors still relying on Asia-Pacific supply chains.”
The situation reflects a broader shift in how automotive suppliers are approaching geopolitical risk. According to data from the U.S. Department of Commerce, auto parts imports from China fell by nearly 17% between 2018 and 2022, while intra-North American trade in the same category increased by 23%.
For workers at Linamar’s 26 North American manufacturing facilities, this positioning offers some job security in an otherwise uncertain economic climate. The United Auto Workers, which represents workers at some of Linamar’s U.S. operations, has expressed cautious optimism about the potential for re-shoring production, though union leaders remain concerned about wage pressures in a more protectionist environment.
“The real challenge for parts makers like us isn’t just weathering tariffs – it’s maintaining cost competitiveness while bringing more production back to North America,” Hasenfratz acknowledged. “We’ve invested heavily in automation and process efficiency to make sure our North American operations can compete globally, tariffs or no tariffs.”
Looking forward, Linamar has announced plans to increase capital expenditure by 12% next year, focusing particularly on expanding capacity for electric vehicle components and precision machining capabilities – areas the company believes will benefit from continued nearshoring trends.
The company isn’t alone in seeing opportunity amid trade tensions. Magna International, another Canadian auto parts giant, has similarly touted its North American manufacturing base as a strategic asset, though executives there have been more vocal about concerns that excessive tariffs could disrupt global vehicle demand.
While Linamar’s quarterly performance demonstrated resilience, the company did acknowledge several headwinds, including ongoing challenges with labor costs in North America and continued uncertainty
