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Aug 6, 2019

'There's a strategy there': Martinrea co-founder supports Trump tariffs

Biggest trade issues for North America's auto industry have been resolved: Martinrea chair


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The chairman of auto partsmaker Martinrea International Inc. thinks there is a method to U.S. President Trump’s tariff madness.

“I think there’s a strategy there,” Martinrea (MRE.TO) executive chairman and co-founder Rob Wildeboer told BNN Bloomberg in a Tuesday interview. “I think that, at the end of the day, there are two basic weapons in international trade: One is tariffs, one is access.”

“China, for example, in its discussions with Canada in terms of dealing with some political issues and so forth, [is] denying access to some of our products. That’s like a 100 per cent tariff. That’s like prohibition. The U.S. is talking about dollar value and, ultimately, I do think their position is a good one,” he added.

Trump’s trade battles include ongoing dialogue with China over a potential free trade pact, as well as the still-to-be-ratified new North American free trade deal, both of which stand to significantly impact the international automotive industry.

“At the end of the day, we all benefit from trade if it’s fair,” Wildeboer said. “If it’s not fair, it’s unsustainable. When something’s not sustainable, it will stop. I think that’s what we’re seeing.”

Martinrea announced its second quarter results on Tuesday that roughly met analyst expectations.

While the company’s shares were trading near two-year lows at $9.98 as of 3:10 p.m. on Thursday, Wildeboer says the price weakness is symptomatic of an industry-wide dip.

“Over the last three years – we did the calculation last Friday – we’re the best performing auto parts stock in our group,” Wildeboer said.

“But, you know, it’s never a good phrase to say: ‘Well, we suck less.’”

However, Wildeboer remains optimistic that the economy will stay above water despite investors pricing in a potential downturn.

“Ultimately, I think that the sector’s being hammered,” he said.

“I think that people are pricing in a recession when there isn’t a recession … and I don’t think there’s going to be one.”