Background
On Saturday, February 1, 2025, President Trump signed an executive order imposing 25% tariff on imported goods from Canada, Mexico and China. In response, the Government of Canada swiftly announced countermeasures, introducing targeted tariffs on American goods to protect Canadian industries and workers. As of February 5, proposed tariffs will be paused for 30 days.
While this temporary break brings great relief, Canadians must be proactive to mitigate the impacts of these shifting dynamics. This is an opportunity to break down barriers to interprovincial trade and diversify our global trade.
Do you know how your business will be impacted?
The proposed tariffs and countermeasures will have a significant impact on the Canadian economy and the construction industry. Potential material cost increases, driven by currency fluctuations and tariff threats pose significant risks. The construction industry’s success will hinge on its ability to adapt to shifting trade dynamics amid upcoming challenges.
Timeline and Updates?
Fact Sheet: President Donald J. Trump Imposes Tariffs on Imports from Canada, Mexico and China (Feb 1, 2025)
Canada announces $155B tariff package in response to unjustified U.S. tariffs (Feb 1, 2025)
Premier Moe Travels to Washington and Mexico to Support Canada U.S. Trade | News and Media | Government of Saskatchewan (Feb 7, 2025)
Fact Sheet: President Donald J. Trump Restores Section 232 Tariffs – The White House (Feb 11, 2025)
Protect Your Business
For existing contracts: What you should know
- Review your contract: Check if your contract includes provisions for price adjustments due to changes in taxes and customs duties, such as paragraph 10.1 in CCDC 2—Stipulated Price Contract or CCA 1—Stipulated Price Subcontract. Remember to review the supplementary conditions even with standard CCDC and CCA contract forms.
- Contracts without duty provisions: If no duty provisions are included, contractors may be liable for covering the increased costs.
CCA encourages owners to fairly consider requests for price adjustments if contractors are facing unforeseen cost increases due to tariffs.
For new contracts: How to address tariff uncertainty
- Raise the issue early: If the contract for a potential project lacks duty provisions, especially if you’re aware of upcoming changes to taxes or customs duties, formally bring this to the owner’s attention.
- Include duty provisions: Encourage the owner to include duty provisions or address this uncertainty in the bid documents. Look to GC 10.1 of CCDC 2 for standard, industry-accepted wording.
Other considerations: Key points to remember
- Argue for cost recovery: If you’re facing unforeseen costs due to increases in taxes and customs duties, you may have a case for recovering additional costs. However, without clear duty provisions in the contract, this may be challenging.
- Cost recovery due to delays: If a project experiences changes, delays, or suspensions that postpone material purchases and result in escalated costs, contractors might be able to recover these additional expenses, depending on the contract and situation.
Final tip: Always read your contract
The most important piece of advice is to carefully read and understand your contracts. To help you with this, check out CCA’s five-part “Read your construction contract” webinar series.
Staying informed and prepared will help your business navigate potential tariff changes with confidence.
Additional Resources
Construction Quarterly Economic Insights: Winter 2025
Amidst a challenging economic climate marked by trade uncertainties and rising borrowing costs, the Canadian Construction Association’s (CCA) winter report highlights how trade policies and material dynamics are impacting the construction industry. Download your copy here, or watch a briefing on this report.
Key Takeaways:
- Canada’s reliance on imports for critical materials like steel, aluminium, and lumber makes the sector particularly sensitive to trade disruptions.
- The construction industry’s GDP experienced modest growth in Q3 2024, reflecting the industry’s resilience in navigating economic uncertainties.
- Investments in multi-residential projects continued to drive growth, increasing during the third quarter.
- The industry must focus on building resilient supply chains and reducing reliance on volatile import markets.
Canadian Chamber of Commerce:
Visit the Canada-US trade tracker, a new tool designed to illustrate the ties between our two economies
Recognizing the importance of these announcements CASK in collaboration with CCA, is diligently working to thoroughly evaluate how these tariffs will be implemented and their potential impact on Saskatchewan’s construction industry.
We are committed to keeping you informed and will continue to provide updates as the situation develops. In the meantime, we are here to support you, please feel free to reach out with any questions or concerns regarding the effects of these tariffs and countermeasures.
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