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North America's Biggest Car-Parts Maker Sees Border Tax Risk

North America's largest auto parts maker said a border adjustment tax being studied by President Donald Trump would probably hurt the automobile industry, while also increasing the odds that future factories will be located in the U.S.

North America's Biggest Car-Parts Maker Sees Border Tax Risk

Canada's Magna International Inc. said the growth of "protectionist sentiments" could hurt its operations and profitability, according to a company statement. The manufacturer is closely watching a potential tax overhaul in the U.S., Chief Executive Don Walker said on a conference call with analysts and investors.

“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. “The latest I understand is that the difference between Canada and the U.S. as far as trade is concerned really isn’t an issue. Having said that, any border adjustment tax I think would be negative for the whole industry.”

The maker of bodies and chassis, car electronics and vision systems relies on the U.S. for about one quarter of sales, and counts on Mexico for another 12 percent. In a meeting with Trump last week, U.S. manufacturers pressed their case that a tax on imports would lead to higher domestic employment. While Trump discussed the potential benefits of such a measure after the discussions, he stopped short of endorsing the proposal.

Based on recent developments, “there’s probably a larger likelihood” that car companies contemplating new investments would put new plants in the U.S. if they had to make a decision now, Walker said. Still, he said, “people will wait to see what the end result is here and make their decision.”

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Canada's Magna International Inc. said the growth of "protectionist sentiments" could hurt its operations and profitability, according to a company statement. The manufacturer is closely watching a potential tax overhaul in the U.S., Chief Executive Don Walker said on a conference call with analysts and investors.

“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. “The latest I understand is that the difference between Canada and the U.S. as far as trade is concerned really isn’t an issue. Having said that, any border adjustment tax I think would be negative for the whole industry.”

The maker of bodies and chassis, car electronics and vision systems relies on the U.S. for about one quarter of sales, and counts on Mexico for another 12 percent. In a meeting with Trump last week, U.S. manufacturers pressed their case that a tax on imports would lead to higher domestic employment. While Trump discussed the potential benefits of such a measure after the discussions, he stopped short of endorsing the proposal.

Based on recent developments, “there’s probably a larger likelihood” that car companies contemplating new investments would put new plants in the U.S. if they had to make a decision now, Walker said. Still, he said, “people will wait to see what the end result is here and make their decision.”

Read Full Article

North America's Biggest Car-Parts Maker Sees Border Tax Risk