Key construction stakeholders are urging the federal government to exclude construction-related products and materials from any retaliatory tariffs imposed on U.S. imports into Canada if the Donald Trump administration goes ahead with its threatened tariffs on Feb. 1.
A coalition of four associations sent a letter to Finance Minister Dominic LeBlanc Jan. 17 arguing that any tariffs imposed on construction materials would significantly hurt the building sector and the broader economy as well as negatively impact critical infrastructure projects and housing construction.
“Tariffs on construction materials could cause significant delays and cost overruns on many vital projects, increasing costs for governments and Canadian consumers nationwide,” stated the letter.
“Further, retaliatory tariffs on construction materials are likely to increase the cost of new housing that many Canadians desperately need.”
The note was signed by executives with the Mechanical Contractors Association of Canada (MCAC), Canadian Construction Association (CCA), Canadian Roofing Contractors Association and the Canadian Water Quality Association.
Mitigating impacts
CCA president Rodrigue Gilbert and MCAC COO Ken Lancastle said the partners are active on multiple fronts, including advocating against the Trump tariffs, pressing their request for the carveout from retaliatory tariffs, developing planning scenarios to address diverse possible circumstances and advising members on how to mitigate the impacts.
Gilbert said the construction sector is nervous as it endures the “waiting game.”
The CCA is engaged with owners, he said, explaining what a 25-per-cent tariff on construction materials could mean for the industry and asking them for flexibility.
“We’re full time on that,” said Gilbert. “We’re hoping, when they’re finally announced, that we have a solution that we can talk to the feds about and talk to the owners about and talk even to entire industries.”
“It’s a very fluid situation,” said Lancastle. “What you’re seeing is a number of associations are working hard to ensure that members are as best prepared as possible to deal with challenges that are coming, whatever those challenges may look like.”
Before his inauguration on Jan. 20, Trump gave notice his new administration would be implementing tariffs of 25 per cent on imports from Canada and Mexico immediately upon taking office.
After being sworn in, amidst a flurry of statements and interviews, he targeted Feb. 1 to impose the tariffs.
Canadian Prime Minister Justin Trudeau then said Canada would respond with dollar-for-dollar retaliation and his government began to assemble a list of its potential tariffs.
Lancastle said the partners do not know if construction materials are under consideration.
A Department of Finance spokesperson acknowledged the petition from the four construction associations and stated, “The government recognizes that the threat of U.S. tariffs on Canadian products, including construction products, raises serious concerns for the industry.”
The official added, “The government is making every effort to prevent U.S. tariffs.”
The letter to LeBlanc argued the construction sector plays an essential role in building and maintaining critical infrastructure, housing and the industrial, commercial and institutional buildings essential to economic growth. Additionally, the signatories asserted, critical energy exports heavily rely on the industrial infrastructure their members are constructing.
Gilbert said, “Everyone needs to understand what it means for us — increased cost, supply chain disruption, and that’s going to have an impact on projects already in place, already being built.”
HVAC imports
The Trade Data Division of Statistics Canada has calculated imports of ventilation, heating, air-conditioning and commercial refrigeration equipment from the U.S. totalled $5.17 billion in 2023.
Imports of paving asphalt, roofing and related materials from south of the border added up to $420 million.
“I think we’ve made our arguments that there is a significant and detrimental impact that retaliatory tariffs could have on the construction industry, and there’s a downstream effect to that in all aspects of the economy,” said Lancastle.
Among the preparatory steps the CCA urged its members to take, it was recommended they review current project contracts to determine if they include provisions for price adjustments due to changes in taxes and customs duties, such as paragraph 10.1 in the CCDC 2 — Stipulated Price Contract or CCA 1 — Stipulated Price Subcontract.
If no duty provisions are included, the CCA noted, contractors may be liable for covering the increased costs.
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