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Jean-Jacques Ruest takes the helm at Canadian National Railway Co. amid a tariff war that threatens to dampen economic growth and hamper the flow of goods.

Mr. Ruest said a lengthy trade war could damage CN and the broader economy, but much of the company’s business can withstand higher tariffs on goods between the United States, Canada, Europe and China.

“Short-term, this whole trade thing for CN is really not material. It’s a question of what’s next,” said Mr. Ruest, 63, who was named chief executive officer of Canada’s largest railway on Tuesday, after serving as interim leader since the March departure of Luc Jobin.

The U.S. move to tax imports of steel and aluminum from Canada, Mexico and the European Union in addition to some Chinese goods has been met with reciprocal tariffs. Amid doubts over the future of the North American free-trade agreement (NAFTA), U.S. President Donald Trump is threatening to impose a 25-per-cent tariff on autos.

In an interview from Montreal, Mr. Ruest said Canadian lumber shipments to the United States continue to rise despite tariffs and CN’s aluminum customer in Quebec and B.C. wants to boost rail shipments to U.S. markets, moving away from trucks and barges.

The 25-per-cent steel tariff has negative and positive effects on CN and its customers. While Ontario steel producers could suffer as they lose access to U.S. markets, CN’s biggest steel customer in the United States, US Steel, stands to gain from a protected market.

As for U.S. threats to tax Ontario auto imports and the tit-for-tat tariffs imposed by China and the United States, “we’ll see how these things play out.” He said he is encouraged by news on Wednesday that the United States and the European Union were working on a trade deal, and said CN’s Halifax and Montreal port operations are well positioned to take part in the trade.

Mr. Jobin left in March, when much of the North American rail industry faced service complaints from customers and pointed questions from government about congested railways and a rail car shortage.

Since then, Mr. Ruest has led CN’s push to expand rail yards and add track, crews and rolling stock in a $3.5-billion strategy to reclaim the railway’s reputation as North America’s best-run carrier.

CN on Tuesday showed the effort is paying off, posting a 27-per-cent rise in profit and raising its expected earnings growth for the rest of the year.

Christian Wetherbee, a stock analyst at Citigroup Inc., called the turnaround “shocking.”

“These guys started to deteriorate in the fall of last year and things got pretty ugly over the course of the winter. Clearly weather had an impact, but the improvement from [the first quarter to the second quarter] was pretty remarkable,” Mr. Wetherbee said by phone from New York. “You’ve got to give them credit. They spent a lot of time and effort and some money focused on improving operations. They did it quicker than a lot of people expected, including me.”

Mr. Wetherbee said Mr. Ruest’s experience in marketing will aid his efforts to restore service and add freight capacity across the company’s 32,000-kilometre network.

“He was in sales for a long time, which brings with it a certain perspective, but not one that’s all that different than the one they’ve been employing since Luc [Jobin] left,” Mr. Wetherbee said. “I feel like what we’ve seen over the past several months is what we’re going to get.”

But uncertainty over new tariffs and trade disputes is a “potential risk” to CN, said Cameron Doerksen, an analyst at National Bank of Canada.

About one-third of CN’s sales are in cross-border shipments. CN’s biggest business by revenue is moving cargo boxes of consumer and industrial goods, and other products. Much of CN’s container business moves through the West Coast ports of Vancouver and Prince Rupert, to and from Asia. Petroleum and chemicals are its second-biggest category, followed by grain and fertilizer.

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