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The chief executive officer of Linamar Corp. said the auto parts maker has faced minimal impact from higher tariffs on metal and components, but worries about the trade war’s effects on the company’s customers.

Linda Hasenfratz said cost increases caused by tariffs on metal and U.S. taxes on Chinese components are not material for Guelph, Ont.-based Linamar due in part to the company’s domestic supply chains for steel and aluminum. But Ms. Hasenfratz said it is “imperative” the tariffs levied by the U.S., Canada and other trading countries be dropped.

“The concern of course is the impact is building in many American companies. Ford for instance announced a US$1-billion impact from higher tariffs,” Ms. Hasenfratz said Wednesday on a conference call with analysts to present the company’s third-quarter financial results.

Linamar posted a rise in profit of almost 6 per cent in the third quarter on higher sales but missed profit expectations.

Revenue rose by 19 per cent to $1.8-billion in the third quarter, compared to the same period a year ago. Profit rose to $113-million, or $1.71 a share, from $107-million ($1.62) in the year-ago quarter. Analysts expected per-share profit of $1.85, according to Bloomberg.

Guelph, Ont.-based has operations around the world and makes automotive engines, transmissions and other components, in addition to lift trucks.

In a statement accompanying the results, which were released after markets closed on Wednesday, Linamar said its transportation division saw sales rise by 5 per cent on more orders from car makers based in North America and Asia. The increase was tempered by a 3-per-cent drop in sales to BMW, Renault and other European car makers affected by new vehicle emissions rules.

Operating earnings for the division fell by $21.5-million, or 20 per cent, partly due to higher costs.

Sales in the industrial division, which includes agricultural gear and lift trucks, rose by 86 per cent after the acquisition of MacDon, a maker of harvesting equipment.

Linamar’s share price has fallen by 26 per cent on the Toronto Stock Exchange this year, compared with a 5-per-cent drop in the broad index.

The United States imposed tariffs on foreign steel and aluminum of 10 per cent and 25 per cent, respectively, in March. The protectionist wave was started Donald Trump, U.S. President, who said he wanted to bring jobs back home and used a controversial national security provision to apply the taxes.

Canada was among the countries that retaliated, levying similar tariffs and including products worth a total $16.6-billion.

Meanwhile, the U.S. and China have swapped tariffs on each other’s goods, raising fears of diminished economic growth.

Ms. Hasenfratz said the U.S. tariffs on Chinese parts comprise about half of the rise in costs due to the trade friction. She declined to name the amount. The company’s U.S. plants buy U.S. metal, which is not subject to tariffs, while the Canadian plants purchase use comparatively little steel and aluminum. In any case, Linamar is able to seek rebates from the Canadian government on the tariffs.

Ms. Hasenfratz welcomed the end of talks to reach a new free trade agreement with Mexico and the U.S., saying the terms announced at the beginning of October are good for the North American auto industry and Linamar.

Linamar has factories in all three countries in the proposed United States-Mexico-Canada Trade Agreement, scheduled to come into effect on Jan. 1, 2020. Under the plan, tariff-free cars must have 75 per cent North American content, up from 62.5 per cent in the North American free Trade Agreement. Also, 40-per-cent of a car must be made by workers paid at least US$16 an hour, a change that favours plants in the United States and Canada over Mexico.

Ms. Hasenfratz said Linamar sees “potential upside” in the higher regional content and labour value rules. “We see no key areas of concern at Linamar,” she said. “I think it’s fantastic that it’s behind us. Everybody can get back to business.”

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