Trade protectionism is a risk to the auto sector: Magna
As reported by The Canadian Press, Magna CEO Don Walker said any border adjustment tax imposed by the U.S. would have a "material adverse effect" on operations and profitability.
The possible rise of protectionist trade measures during the Trump presidency will be a key risk to the auto industry, Canadian auto parts supplier Magna International Inc. has warned.
As reported by The Canadian Press news agency, Magna CEO Don Walker has said that any border adjustment tax imposed by the United States would be negative for the industry, but noted it’s still too early to tell what’s going to happen.
“The industry as a whole is trying to get all the facts to the right people so at least they understand what the impact might be,” Walker said during a Feb. 24 conference call with financial analysts that was reported by Canadian Press. “I think it will be quite a while before we really understand what the changes might be, what the impact would be, and nothing happens overnight. But we are very closely watching and having involvement in any discussions.”
Aurora, Ont.-based Magna has operations in 29 countries including the U.S. and Mexico.
In identifying some of its more significant risks in its quarterly financial report, Magna said the auto industry is dependent on open borders, particularly in Europe and North America. “The continued growth of protectionist sentiments and implementation of measures which impede the free movement of goods, services, people and capital could have a material adverse effect on our operations, profitability or results of operations,” the company said. In its latest profit statement, Magna said its profit for the last three months of 2016 amounted to US$478 million, up slightly from a profit of US$476 million in the same period a year earlier. Sales in the quarter totaled US$9.25 billion, up from US$8.57 billion.