RC119 JulyAugust 2025 - Magazine - Page 30
LEGAL
NAVIGATING U.S.-CANADA
TARIFF TENSIONS
Managing risk through carefully drafted construction contracts
by Brian P. Reid and Lily Suh
The reliance on U.S. materials for Canadian construction projects presents a
significant challenge for contractors and owners with tariffs taking effect.
Brian Reid is a partner
at Bennett Jones in
Calgary. He has a
diverse commercial
litigation practice with
a strong emphasis on
construction and energy
related disputes.
Lily Suh is a
student-at-law at
Bennett Jones in Calgary.
30
RIVEN BY GROWING housing needs, clean energy policies and a high volume of telecommunications
transactions, demand for Canadian infrastructure
projects has been rising. However, ongoing uncertainties around U.S. tari昀昀s on Canadian goods and
reciprocal Canadian tari昀昀s (collectively, the tari昀昀s)
threaten to undermine this positive trend. What was once
one of the world’s strongest trade relationships is becoming
increasingly strained with growing protectionist policies
driving nationalist narratives and disrupting existing trade
agreements. This growing divide is felt across Canadian
industries, particularly in construction.
Although the timing, amounts and goods that will be
subject to these tari昀昀s remain a moving target, they are
expected to complicate procurement activities, increase
construction costs and potentially cause delays. Uncertainty
felt by commercial parties will likely be manifested during
contract negotiations as contractors and owners seek to implement protective measures to protect themselves against
volatility.
D
RENEW CANADA – JULY/AUGUST 2025
The U.S.-Canada trade relationship
from a construction perspective
The reliance on U.S. materials for
Canadian construction projects presents
a signi昀椀cant challenge for contractors
and owners with tari昀昀s taking e昀昀ect.
The U.S. is a major import partner of
Canada with a long history of supply
chain integration. The U.S. is also
an important source of industrial
products and manufactured goods for
Canada, making the threat of tari昀昀s and
countermeasures to Tari昀昀s especially
concerning.
Canada responded with reciprocal
tari昀昀s on U.S. goods in the 昀椀rst quarter
of 2025. The current list of U.S. products
subject to counter-tari昀昀s include
commonly used U.S. sourced construction products,
including: base metal mountings, 昀椀ttings and similar
items; chemical and mechanical wood pulp; 昀椀breboard,
plywood and laminated wood; Files, pliers, pipe-cutters,
bolt croppers, perforating punches and similar hand tools;
Moving, grading, levelling, scraping, excavating, tamping,
compacting, extracting or boring machinery, pile-drivers/
pile-extractors; snow-ploughs and snow-blowers; and
various forms of precious metals.
In addition to these items, e昀昀ective March 13, 2025, steel
and aluminum products from the U.S. became subject to a
surtax of 25 per cent which was implemented in response
to the 25 per cent tari昀昀 on all steel and aluminum products
from Canada imposed by the U.S. on March 12, 2025.
Canada also implemented a 25 per cent tari昀昀 on nonCUSMA-compliant, U.S.-made vehicles and U.S. content
of CUSMA-compliant U.S.-made vehicles. This was again
a reciprocal tari昀昀 after the U.S. imposed a tari昀昀 against the
Canadian auto sector.
In response to the latest tari昀昀s, a number of Canadian
provinces have also banned U.S.-based companies from
doing business with that province. For example, Ontario’s
new Procurement Restriction Policy excludes certain U.S.based companies (a company must have its main o昀케ce or
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GETTY IMAGES
In this article we look at the
potential e昀昀ects of the tari昀昀s on
Canadian construction projects from
a legal perspective—and o昀昀er some
recommendations for mitigating these
risks through carefully drafted contract
language
