RC117 MarApr 2025 - Magazine - Page 8
2025 OUTLOOK
LEADERSHIP
NAVIGATING THE TARIFFS STORM
Rising U.S.–Canada trade tensions are causing uncertainty in the
construction industry By Syed Ali and Bulut Cinar
A
Syed Ali is a
Director with HKA.
Bulut Cinar is a
Director with HKA.
8
RENEW CANADA – MARCH/APRIL 2025
This article explores the potential impact of tari昀昀s on
the construction industry, highlighting how key materials such as steel, aluminum, and lumber could result
in supply chain disruptions, cost overruns, and project
delays and, in turn, exacerbate market uncertainty and
rising costs of the disputes. To help the industry navigate
these challenges, the article provides strategies to manage
costs, mitigate risks, and maintain project timelines. With
potential disruptions on the horizon, understanding and
preparing for the e昀昀ects of U.S.–Canada trade disputes is
essential for construction stakeholders in an increasingly
complex economic landscape.
The construction industry’s dependence on
Canada–U.S. trade
Given the extensive trade between the two countries, it is
not surprising that the construction sector on both sides
of the border is heavily dependent on the trade of raw
materials and manufactured products. Comparatively,
Canada’s trade relationships with other regions and countries, such as the European Union and China, pale in scale
when contrasted with the United States, underscoring the
bilateral dependency. The U.S. and Canadian construction
sectors are deeply intertwined through the supply chain
across the border, which includes expertise, labour, and
materials. Key components of the construction supply
chain include:
Softwood lumber
Steel and aluminum
Cement and concrete products
Machinery and equipment
Appliances, tools, and 昀椀xtures
Speci昀椀cally, in 2023, the United States imported approximately 28.1 million cubic meters of softwood lumber
from Canada, which is approximately 30 per cent of the
softwood lumber consumed in the United States each
year. It is also widely reported that Canada is the largest
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GETTY IAMGES
CORNERSTONE OF CANADA’S ECONOMY economy, the construction sector, contributes nearly 7.5 per cent
to Canada’s gross domestic product (GDP) and,
together with the real estate industry, accounts
for over 20 per cent of the nation’s economic
output, according to 2023 Statistics Canada Data.
However, escalating trade tensions between the United
States and Canada are creating uncertainty for the industry. The two countries share one of the world’s most significant trading relationships, with total trade in goods and
services estimated at $968 billion annually in 2023. The
imposition of tari昀昀s by the United States and countermeasures by Canada have raised concerns about cost escalations, material delays, and supply chain disruptions, all of
which could ripple through the construction industry.
The Trump Administration’s “America First Trade
Policy” proposes new tari昀昀s on steel and aluminum
imports to boost U.S. domestic production. These
measures could signi昀椀cantly impact Canadian exporters.
Additional tari昀昀s on key construction materials such
as lumber and cement further heighten challenges for
Canada’s construction industry, which heavily depends
on cross-border trade. In response, Canadian o昀케cials
have implemented retaliatory tari昀昀s targeting U.S.
construction equipment, manufactured goods, and
energy products, echoing strategies used in prior trade
disputes.
These developments highlight the volatility of the
Canada–U.S. trade relationship and its signi昀椀cance to
industries on both sides of the border. In 2023, Canada’s
exports to the United States accounted for approximately
77 per cent of its total exports, while imports from the
United States represented over 50 per cent of its total
imports, according to Statistics Canada. This interdependence ampli昀椀es the potential consequences of trade
disputes on the construction sector, which relies on
cross-border supply chains.
