Welcome to the Daily 5 report for Wednesday, Jan. 29.
With Trump administration tariffs looming for Canada and Mexico at the end of the week, alarm bells are going off at some of North America's largest auto suppliers.
Linda Hasenfratz, the chairperson and former CEO of Canadian supplier Linamar Corp., didn't mince words this morning in a call with our sibling publication, Automotive News Canada:
"If indeed 10-percent or 25-percent or, in my opinion, almost anything in the way of tariffs, is imposed on auto parts crossing the (Canada-U.S.) border, I think we will pretty quickly stop making vehicles in North America. Because nobody can absorb this kind of cost," she said. "I'm going to say it's not more than a week before production halts. You can't make a car unless you have every part."
Linamar operates 24 facilities in Canada, six in Mexico and 17 in the U.S. The majority of them make parts for the auto industry — some of them in critical just-in-time mode as we found out from the floods last fall in North Carolina.
Seating supplier Adient and airbag maker Autoliv this week also made it clear they won't be paying for the tariffs, automotive customers will have that responsibility.
"Autoliv has the same view as Adient. Potential tariffs will affect the automotive industry, including us. If imposed, increased costs will likely be passed on to customers, resulting in more expensive cars," the company said in a statement to Automotive News Canada.
For what it's worth, U.S. Commerce Secretary nominee Howard Lutnick said today that Canada and Mexico can avoid Trump's threatened 25 percent U.S. import tariffs if they swiftly act to stop allowing fentanyl and illegal immigrants into the U.S.
According to Reuters, Lutnick told a U.S. Senate confirmation hearing: "So this is a separate tariff to create action from Mexico and action from Canada," Lutnick said of the 25 percent duty threat. "And as far as I know, they are acting swiftly, and if they execute it, there will be no tariff."
In another response to potential tariffs, Volkswagen dropped an interesting hint about future plans for North American production, according to a story originating in a German newspaper that said the automaker could pivot its Chattanooga plant to build Audis and Porsches. VW's new plant for its Scout brand in South Carolina is another option for Audi production, the report said.
Want to know what the UAW and organized labor feared most about a second Trump presidency? It's this development from late yesterday. Union grievances against employers are essentially going to grind to a halt following the removal of two Democratic officials at the National Labor Relations Board, the arbiter of labor disputes.
Finally, after years of rumors surrounding a major merger or acquisition for longtime Detroit 3 supplier American Axle & Manufacturing, the company early this morning announced a $1.4 billion agreement to buy U.K. driveline supplier Dowlais, the owner of GKN Automotive.
This segment of the supply chain has been navigating the electric vehicle transition for several years and analysts long expected a transaction like this to happen. The deal remains pending the usual shareholder and regulatory approvals, but it promises to boost American Axle's profitability over the next several years. So far, Wall Street isn't on board, knocking the shares down about 10 percent (see closing stock prices below).
Next up this afternoon will be the much anticipated earnings report for Tesla Inc. after 4 p.m. EST. Click on this link sometime after the numbers drop.
That's it for now. Have a great rest of your day.
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— Philip Nussel, online editor
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