The Canadian construction sector is bracing for another round of tariff-related pressure as Canada prepares to impose new counter-tariffs on U.S. goods.
The Canadian Construction Association (CCA) has issued a bulletin warning that a broad range of construction materials and equipment could be affected, with the industry particularly exposed because of its reliance on imported products.
“The bottom line for our industry, construction is a net importer of critical materials, and this list hits hard,” the CCA said in its bulletin.
The warning comes ahead of Canada’s latest tariff measures. On Aug. 25, responding directly to the 50 per cent U.S. tariff imposed on Canadian exports, Ottawa announced dollar-for-dollar counter-tariffs covering $27.6 billion worth of U.S. goods. The new measures are scheduled to take effect Sept. 8.
According to the CCA, the continuing escalation of the Canada-U.S. trade dispute could create significant disruption on construction sites across the country. Projects could face delays and higher costs, potentially making it more difficult for Canada to deliver the infrastructure, housing and trade corridors required to support economic activity.
Steel, lumber and construction equipment among the hardest-hit materials
The CCA has identified several areas where the impact is expected to be particularly significant.
Steel and aluminum are among the most exposed materials, with tariffs on structural and derivative products set to double from 25 per cent to 50 per cent.
Lumber and wood products are also facing substantial increases. Plywood, laminated veneer lumber (LVL) and sawn wood are subject to tariffs ranging from 25 to 50 per cent.
Meanwhile, dozens of other construction inputs will face tariffs between 15 and 50 per cent. The list includes fasteners, HVAC equipment, scaffolding, doors and windows, lifting machinery and other products used throughout the construction industry.
The association says Canada’s dependence on foreign suppliers leaves certain segments especially vulnerable.
“Based on the latest supply and use data from 2024, only 60 per cent of all manufactured inputs used in Canadian construction are sourced domestically, while 25 per cent are supplied U.S. producers,” the CCA noted.
Exposure to U.S. imports is even greater in engineering construction. In areas such as communications and oil and gas, roughly 40 per cent of inputs are sourced from the United States, a share that exceeds the proportion supplied domestically.
Domestic production cannot fully replace U.S. imports
The CCA recognizes that lower exports could potentially free up some additional domestic production capacity. But it warns Canada doesn’t make all the types of steel needed by the construction industry.
So we can’t assume the cost impact will be offset by substituting U.S. supplies with domestic products. If the materials required are not produced in Canada, tariffs could still increase prices.
The federal government has provided tariff relief on 179 steel mill products not produced in Canada. “These exemptions help to mitigate some of the most immediate costs of the counter-tariffs imposed by Canada,” the CCA said.
Ottawa adds $7.5 billion in support
Alongside the tariff measures, the Canadian government has announced another $7.5 billion support package, bringing total economic support linked to the trade dispute to $25 billion since the conflict began.
The CCA stressed that the latest package does not consist entirely of direct grants to companies. The measures include loans, regional financing, worker support programs and funding designed to help businesses adapt.
Eligibility requirements, availability and application procedures differ between programs, while full implementation details have not yet been released for every measure.
Among the key measures highlighted by the association are:
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$1.5 billion in additional funding for the Regional Tariff Response Initiative, aimed at helping small and medium-sized businesses manage tariff-related pressures.
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$2 billion more through the Canada Strong Diversification Fund, including greater cooperation with Canada’s regional development agencies (RDAs), as well as programs for project intake and triage.
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A new $3.5 billion package under the Rapid Response Supports for Workers and Employers Initiative, including extended and additional temporary employment insurance flexibilities, enhancements and training opportunities delivered through Job Bank.
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Greater flexibility under the Large Enterprise Tariff Loan facility, operated through the Canada Enterprise Emergency Funding Corporation (CEEFC), allowing liquidity support to be extended from 24 months to 36 months.
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An additional $500 million for the liquidity stream of the Business Development Bank of Canada’s Pivot to Grow Program, designed to ease cash-flow pressures, with support ranging from $250,000 to $5 million.
Contract terms could determine the impact on individual projects
The CCA is also urging construction companies and project stakeholders to examine their individual contracts, noting that the effect of tariffs can vary significantly depending on the contractual provisions in place.
The Canadian Construction Documents Committee (CCDC) previously issued Bulletin 11 – Adjustments in Contract Price Due to Tariffs, which provides guidance on contractual considerations surrounding cost increases driven by tariffs.
The association is encouraging its members to review the bulletin alongside their contracts to determine their potential exposure.
“Members are encouraged to review the bulletin alongside their contracts when assessing potential exposure and to have timely and candid discussions with their project partners about tariff impacts,” the CCA said.
