Linda Hasenfratz’s warnings on the trade war have been clear and swift: auto factories would begin to shut down in no more than a week with 25 per cent U.S. tariffs, the chair of Canadian auto parts giant Linamar said in February.

Hasenfratz was responding at the time to the White House announcement of 25 per cent levies on goods imported from Canada and Mexico—a blow the U.S. cushioned with exemptions for products traded under the United States-Mexico-Canada Agreement (USMCA). They included sizable carve-outs for vehicles and parts.

Her fears have returned with force, though, as another negotiating deadline between the U.S. and Canada looms on Friday. Preserving the USMCA in those talks is critical for manufacturers, because the pact has been “saving the bacon” of suppliers over the past few months, said Hasenfratz, who was CEO of the Guelph, Ont.-based Linamar for 22 years before moving to her role as executive chair last year. 

While U.S. Commerce Secretary Howard Lutnick suggested earlier this month that tariffs would only apply to goods outside the USMCA, President Donald Trump has given no such assurance.

“The majority of parts that are crossing the border back and forth between Canada, the U.S. and Mexico are USMCA compliant, so they are continuing to move tariff-free through the continent,” Hasenfratz said Tuesday in a wide-ranging interview with The Logic. “In the absence of that, I continue to believe we would have an industry shutdown in a matter of days.” 

It is not a message delivered lightly. Hasenfratz serves on the Prime Minister’s Council on Canada-U.S. Relations, and has seen firsthand the destruction tariffs have wrought on the automakers that buy from Linamar. New U.S. tariffs have so far trimmed US$800 million, US$1.1 billion and US$1.5 billion each from the bottom lines of Ford, General Motors and Volkswagen. 

Meanwhile, Linamar’s suppliers are among the small and medium-sized businesses saddled with steel and aluminum tariffs. Hasenfratz is also meeting with scores of executives of big U.S. manufacturers like John Deere and Caterpillar, many of whom are flying to Toronto this week, where she will chair a meeting of the Association of Equipment Manufacturers. 

“Suppliers and automakers in the U.S. are bringing metal in, a lot of it from Canada, because they just don’t have a choice,” she said. 

The message she’s hearing from all sides: Canada must hold out for the right deal, one that safeguards the USMCA. 

The fate of multi-billion-dollar Canadian companies like Linamar hang in the balance. Hasenfratz’s father, Frank, built the company from Linda’s childhood garage and was known to joke that if his work day started at 7 a.m. and ended at 7 p.m., he had worked a “half day.”  Since becoming CEO in 2002, Hasenfratz has built quarterly sales from about $300 million to over $2.5 billion, through a recession, pandemic and historic auto workers strike. 

So far, she said, Linamar and its 32,000 employees have seen only minor impacts from tariffs. Ten of its 75 plants are in the U.S., she said, but its parts are compliant with the trade deal. Moreover, it is not solely reliant on the auto industry, with investments in agricultural and medical technology. 

But Linamar’s other lines of business have had their issues—even before tariffs. Low crop prices were squeezing farmers’ budgets in late 2024. Despite hopes it would be a leader in the gigacasting technology used by companies like Tesla, Linamar shelved plans to open a new plant in Welland, Ont., in February, citing shifting consumer sentiment in the auto market. 

“This whole transition on the auto side into electrification that had a big push, and then big pullback that really hurt a lot of companies,” Hasenfratz said.

Because the threat of an auto-industry shutdown is now apparent, Hasenfratz said she has “high confidence” the USMCA will be respected in negotiations. And she sees “huge” opportunity in onshoring Canadian companies like Linamar, as Europe and Japan grapple with new 15 per cent blanket tariffs on their exports to the U.S. The fact the Association of Equipment Manufacturers, which typically holds its meetings in the U.S., is convening in Toronto suggests global manufacturers see how Canada’s economy will influence their futures, she added. “It just emphasizes the importance of the USMCA agreement.” 

“The automakers are looking at what they’re buying from Europe, what they’re buying from Asia, and looking to bring it back to North America, where we remain tariff-free—hopefully for the long haul, but certainly for the moment if you’re USMCA compliant,” she added. “We’re actively quoting opportunities for product to be onshored.” 

Hasenfratz hit on other subjects in her conversation with The Logic. Among them:

M&A opportunities 

“There’s actually huge opportunity right now, not just for picking up distressed assets—although that’s definitely an opportunity that is out there, because there is a lot of distress in the supply base on the auto side—but in other businesses as well, whether it’s in the agricultural phase or in the construction equipment.

“There’s a lot of distress in the supply base in Europe in particular, certainly on the auto side.

“Anytime you have a challenging situation or crisis, you have to quickly address those risks. But you must look for opportunities. You can’t cut your way out. You need to grow your way out, or you need to do a little bit of each.” 

Canada’s R&D problem, and the Scientific Research and Experimental Development tax credit (SR&ED) 

“I have long had issue with the way that our government measures R&D investment in Canada. 

“There’s a lot of work that happens in R&D developing existing products: you’re making improvements to it, making it more efficient, making it more cost-effective. None of that is SR&ED eligible. 

“What Canadian business is investing in R&D is probably two to three times what the Canadian stats suggest that they are. So we are making ourselves look bad.” 

Diversifying Canada’s auto footprint 

“Some suppliers more focused on domestic production are suffering, because domestic vehicle production in Canada has declined. That’s largely because 75 per cent of vehicles that are tooled up in Canada are also tooled up in the U.S. So it’s pretty easy to kind of reduce shifts in Canada and increase shifts in the U.S. [Many Mexican] vehicles are only tooled up in Mexico.”

Excerpts have been edited for length and clarity.