At the time of writing, U.S. President Donald Trump had just announced a 25% tariff on Canadian steel and aluminum products. This would be part of the general 25% tariff on all Canadian exports to the U.S., scheduled to take effect in early March.
In turn, our federal government has threatened retaliatory but unspecified tariffs on U.S. imports. While no one knows the length and extent of this ever-evolving political situation, it is already having consequences for equipment suppliers and municipalities.
The Federation of Canadian Municipalities (FCM) says it “strongly condemns new U.S. tariffs on Canadian products and warns of the severe consequences they will have on local economies across the country.”
“Municipalities are the backbone of the Canadian economy and the engine that drives growth, productivity and jobs,” said FCM President Rebecca Bligh in a February 1 statement. “Tariffs put local businesses,workers and supply chains at risk. Any response to the actions of the U.S. administration must be coordinated across all orders of government, as municipalities play a crucial role on Team Canada.”
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Green Building Canada is a network connecting sustainability-focused professionals, homeowners and the green building community across Canada. On its website it says that Canada’s proposed retaliatory tariffs on U.S. goods target a wide array of products crucial to the Canadian construction and manufacturing sectors.
These retaliatory tariffs could have significant ripple effects throughout Canada’s construction industry, warns Green Building Canada. For projects that rely heavily on U.S. imports, the increased costs could delay timelines, raise overall expenses and jeopardize projects entirely.
Green Building Canada added that “the potential [retaliatory] tariffs could encourage a shift towards sourcing materials domestically or from alternative international suppliers.”
The Ontario Sewer and Watermain Construction Association represents 750 companies, including contractors, manufacturers, distributors, and consulting engineers from across the province. In a February 5 bulletin, it said, “there remains questions about the implications of future potential tariffs to Canada’s construction and infrastructure industry, as the costs of products essential to construction could immediately increase upon the introduction of any such tariffs.”
It advises members and the industry to check if contracts include, “provisions for price adjustments due to changes in taxes and customs duties.”
The idea of Canadian retaliatory tariffs and a “Buy Canadian” attitude is not new, nor are the cautious warnings of trade and industry associations.
In 2009, there was a lot of concern over the implications of the Obama Administration’s “Buy American” provisions contained in the American Recovery and Re-investment Act (ARRA).
In a survey taken in the fall of 2009, less than one in three member companies of the Ontario Pollution Control Equipment Association (OPCEA) supported the FCM’s “Fair Trade” Resolution that was crafted in response to the ARRA. This resolution encouraged Canadian municipalities to adopt procurement policies that excluded the use of products in infrastructure projects that were imported from countries that did not allow free and unfettered access to Canadian-made products.
Like many supplier associations, OPCEA is comprised of companies that manufacture equipment and supplies in Ontario, as well as companies that sell, or distribute imported equipment and supplies. While the association recognized the need to support free access to the U.S. market for its Canadian manufacturing members, it also supported member companies that sell American products into the Ontario market.
It was the opinion of OPCEA in 2009 that Canadian and U.S. markets are inextricably linked, and that any policy restricting market access in either direction is counter-productive and will ultimately negatively affect Canadians.
In writing this article I reached out to several current OPCEA members and they expressed the same sentiment with the current trade war situation. Also, they noted that Canadian equipment manufacturers still do not have either the range of products, nor the capacity, to fill the void that would be created if U.S.-made wastewater and water infrastructure products could no longer be purchased.
Maintaining and expanding water and wastewater treatment plants and their infrastructure systems to meet demand still needs to happen regardless of tariff cost increases. Municipalities are already under pressure to support ambitious housing targets that are a priority to Canadians, and the tariff chaos is only complicating matters. Improved efficiencies will help somewhat, but commodity and equipment prices will always be a key factor.
While the current situation is serious and unpredictable, there is some consolation to be found in the fact that this is not the first time Canada’s water, wastewater and environmental industries have faced trade complications with our southern neighbour. Let us hope that any tariff-induced project delays (and sleepless nights) are short lived.
Steve Davey is the editor and publisher of ES&E Magazine. Email:steve@esemag.com
Runaway inflation has already affected infrastructure projects in Ontario. Due to the length of time required to design and tender a project, many projects are already coming in over budgets that were approved years ago. Imagine if you will, the impact of countervailing tariffs of 25% on US made goods and equipment. A tit for tat tariff war with the USA would be beyond stupid, but not out of the realm of possibility where the FCM is concerned.