Construction workers move equipment after a housing announcement in Toronto, in August.Sammy Kogan/The Canadian Press
Stainless steel sinks, plywood and other homebuilding products from the U.S. will be hit with tariffs up to 50 per cent because of the trade war, driving up construction costs when the building industry has already been dealing with years of rising expenses.
The Canadian countertariffs on $28-billion of U.S. goods took effect on Tuesday and cover hundreds of items, including key homebuilding components such as heating and air-conditioning parts.
“Canada simply cannot afford to put more obstacles in the way of home building,” Frank Lohmann, interim chief executive of the trade group Canadian Home Builders’ Association, said in an e-mailed statement.
“Adding further costs and uncertainty to the construction process will only delay or cancel new housing projects,” he said.
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The pandemic already boosted costs for homebuilders because of labour shortages and increased supply problems as construction materials were not able to easily move across borders.
Today, residential building costs across large Canadian metropolitan areas are 73 per cent higher than in 2019, according to Statistics Canada data.
Scott McLellan, chief operating officer of Toronto homebuilder Plazacorp, said the countertariffs will not only increase costs but also delay project launches.
If the price of carpets, drywall, windows or any other homebuilding material can change overnight, he said, builders do not know how to figure out the cost of developing homes.
“How do you budget for it?” he said. “It’s not like we buy materials and stockpile them somewhere. We can’t.”
Habitat for Humanity Canada, which helps lower-income Canadians buy homes, agrees.
“Homebuilding is already a high-cost environment and not knowing where prices will land makes it even more challenging to predict costs,” said Pedro Barata, the charity’s CEO.
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The Canadian Construction Association, an industry lobby group, has identified 53 products most relevant to the construction industry and its supply chains that are affected by countertariffs on U.S. goods.
The association’s estimates show that a majority of these items would be hit with 50-per-cent levies. That includes laminated veneer lumber, steel doors, windows, frames and thresholds, as well as steel nuts, aluminum wire, bars and rods.
Other products such as stainless steel sinks and air heaters would be hit with a 25-per-cent tariff. Items such as bulldozer blades would be slapped with a 15-per-cent tariff, according to the group’s estimates.
Like Plazacorp, major B.C. housing developer Wesgroup Properties said it is still trying to figure out how the tariffs would affect its business.
“Part of the issue is the situation is so volatile and it’s difficult to forecast any outcome,” said Beau Jarvis, CEO of Wesgroup, which has been building homes for more than six decades.
He said the cost of structural steel framing has increased 8.5 per cent, and metal fabrication is up about 10 per cent, which will put major pressure on construction costs into next year.
Wesgroup is looking at alternate suppliers, but swapping products is not that simple.
“You cannot just swap that product out without it impacting something else,” Mr. Jarvis said.
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Desjardins principal economist Florence Jean-Jacobs said in a research note on Tuesday that in some cases, materials and equipment are sourced from highly specialized manufacturers, making substitutes difficult to find.
The national homebuilder association is urging the federal government to help identify and assess non-U.S. products that meet Canadian requirements.
Another trade group representing landlords and rental building developers said its members have been trying to diversify their supply chains in response to trade disputes.
“Many are sourcing construction materials from Canadian suppliers,” said Tony Irwin, president and CEO of the Federation of Rental-Housing Providers of Ontario.
He also said it is still too early to determine the full impact of the latest tariffs and countertariffs on costs and construction timelines.