B.C. construction costs to increase as Canada-U.S. tariff battle simmers
VANCOUVER — British Columbians can expect the cost of building big projects, from bridges to residential skyscrapers, to rise as a result of the tit-for-tat tariff battle between Canada and the United States, according to one industry association.
Canada’s retaliatory tariffs against U.S. steel, aluminum and a wide range of targeted consumer goods took effect July 1.
Twelve days in, construction firms face difficulties in getting suppliers to give them firm prices on tariff-affected materials, said Fiona Famulak, president of the Vancouver Regional Construction Association.
And regardless of whether construction projects are financed by the public sector or privately owned, “the price of your construction project will go up as a result of tariffs,” Famulak said.
Canada levelled import tariffs of 25 per cent on imported U.S. steel products and 10 per cent on American-aluminum products in response to American tariffs by U.S. President Donald Trump’s administration launched under provisions of national security.
Canada, the European Union and Mexico are all caught in the U.S. tariff war that reflects an increasingly protectionist American trade policy.
On another front, the U.S. also hit $34 billion US worth of imported goods from China with a 25 per cent tariff, which prompted the Chinese government to counter with a 25 per cent tariff on American soybeans, meat and vehicles.
Famulak didn’t have statistics on how much B.C. firms rely on steel from the U.S., but she does know that Canadian steel mills can’t fill all of Canada’s demand for steel in all the forms included on the tariff list.
“It could be rebar, for example, which is used in the infrastructure framework of buildings, all the way to stainless steel in the refrigerators of commercial buildings and highrise residential,” she said.
Across the board, the Canadian retaliatory action will hit about $1.7 billion worth of U.S. imports to B.C., which has annual imports of about $52 billion, according to Bryan Yu, deputy chief economist for Central 1 Credit Union.
Yu characterized the impact, about three per cent of all imports, as modest, but a burden that consumers will have to bear.
U.S. tariffs might cut Canadian auto output by about half and shrink GDP by 1.5 per cent.
“I think we are going to see some inflationary pressures emerging from this,” Yu said. “It’s a question of how businesses are going to pass that cost to end consumers.”
The list of consumer goods that also face a 10 per cent import tariff includes orange juice, ketchup, cucumbers and pickles, whiskies, toilet paper and recreational vehicles and boats — both sail and power — that are strategically targeted at states where Trump enjoys strong support.
Whiskies, for example, are a major product of Kentucky, the home of Republican Sen. Mitch McConnell, the Senate’s majority leader.
However, despite zeroing in on a wide range of grocery items — mostly sauces, condiments and candies — they likely won’t have a big impact on Canadian grocery shoppers, said food-security expert Sylvain Charlebois.
“There are Canadian alternatives for most of these [taxed] products,” said Charlebois, a professor of food distribution policy at Dalhousie University, though they aren’t always cheaper.
Canada, and B.C. in particular, import far greater volumes of vegetables and produce that aren’t on the tariff list than the sauces, condiments and jam that are on the list.
“Honestly, I don’t think [tariffs] are going to affect grocery prices all that much,” Charlebois said. “The concern I have is whether this will escalate.”
The tariff measures have also increased the amount of paperwork importers have to complete to bring goods into the country.
Patti O’Malley, a trade consultant with Davidson & Sons Customs Brokers Ltd., said the firm had to pay for computer programming work to get its systems to flag goods subject to the tariff, then manually calculate the additional tax.
“It’s just an extra learning curve for all the staff to recognize what’s being impacted,” O’Malley said.