The tit-for-tat tariffs imposed on steel and aluminum products, first by the U.S. and then by Canada, will only raise costs for materials and ultimately make it more expensive to build commercial structures, bridges and condos, according to various stakeholders in British Columbia’s construction industry.

“The impact will be that the price of materials will go up,” says Fiona Famulak, president of the Vancouver Regional Construction Association (VRCA), which represents contractors, manufacturers and suppliers.

“Therefore the cost of construction will increase and ultimately the price of the finished product, whether it’s a condo or whether it’s any construction paid for by consumers or taxpayers, will be borne by consumers.”

The U.S slapped Canada with tariffs of 25 per cent on steel and 10 per cent on aluminum on June 1 and Canada retaliated a month later with identical tariffs on American steel and aluminum and surtaxes on other goods.

Because Canada is a net importer of steel, the tariffs will affect billions of dollars worth of construction underway in B.C. as well as numerous ventures that are planned in the province over the next few years.

“The Canadian tariffs will and are already having an impact on pricing,” says Famulak. “Very soon after the July 1 announcement, we heard from members that the tariffs were pushing up prices across the supply chain.”

The tariffs affect those who already have contracts and those that are building, says Famulak, because the price increase will have to be absorbed by the contractor unless there is a relief provision in the contract.

Our only option is to pass the increases from our suppliers of the materials and equipment onto the customer

— Bruce Sychuk

B.C. Sheet Metal Association

“If the contract gives relief, the contractor will not need to bear the responsibility, but if the contract does not give relief then the contractor will need to bear the liability and that’s where the real problem is.”

Those presently bidding on projects will also be affected, as most construction contracts require a contractor to guarantee a price upfront, says Famulak. If prices are uncertain there’s no way to provide a lump-sum bid.

“That would disqualify a contractor from bidding if a lump-sum bid is required,” she noted, “so there’s a concern at the bidding stage and there’s also concern for the contracts that are currently underway.”

Chris Atchison, president of the B.C. Construction Association, says trade wars are a losing proposition and are counterproductive.

A more palatable action, he says, is to focus on consumer discretionary and luxury purchases where Canadians have multiple options for substitution and the burden is felt by U.S. companies in politically strategic jurisdictions.

“Apply tariffs to American discretionary products that are competing in Canada with Canadian brands, giving Canadian brands an opportunity to gain market share domestically,” he says.

Atchison says construction represents 8.9 per cent of the provincial GDP of B.C., with $75-billion worth of projects underway and another $325-billion proposed while multi-residential housing is at a premium.

“We strongly urge that all steel, iron and aluminum products be removed from the list,” he states.

Atchison had advised the Canadian government against imposing tariffs on construction materials from the U.S. because margins are low for B.C. developers and contractors, and housing is already not affordable.

“Tariffs on steel, iron and aluminum, which are crucial materials for construction, will just make these situations worse.”

Bruce Sychuk, executive director of the B.C. Sheet Metal Association, says the tariff situation has been discussed at board meetings but he’s not sure how the organization would be able to affect decision-makers.

“Our only option is to pass the increases from our suppliers of the materials and equipment onto the customer,” he says.

Sychuk believes Canada has handled the tariff situation the best it could.

“It’s tough dealing with a bully and it’s like bringing a knife to a gunfight.”

Sychuk says the association’s members will make it through the ordeal and “we will deal with it as we deal with all the situations that present themselves on an everyday basis.”

Meantime, Famulak says she and association members are working with the Canadian Construction Association (CCA) to collect examples for the government of how the tariffs are negatively impacting businesses.

“Hearsay is not enough,” she says. “We need to be specific and we need to be factual so that we can present a factual case to the province about the impact of the tariffs, so that process is currently underway.”

The VRCA is also working with the CCA on an advisory bulletin to help stakeholders navigate the tariff minefield.

This comes amidst a recent announcement that the federal government is launching a consultation period and will seek input from producers, users and the public as it considers imposing “safeguards” on the import of several steel products. The consultations will focus on products that could see safeguard action such as steel plates, concrete reinforcing bars, energy tubular products, hot-rolled sheets, pre-painted steels, stainless steel wire and wire rods.

Famulak says members of the VRCA want the longstanding trading partnership between the U.S. and Canada re-established.

“We want to get back to the previous trading relationship that has been successful for many, many years.

“In the meantime,” she says, “we’ll continue to work with our partners such as the Canadian Construction Association to inform government of the real-life impact of the tariffs at the frontline and we’ll continue to work with our members to provide the support they need to navigate the situation.”