The temporary reprieve we wrote about in March was just that – a temporary reprieve. (read our blog “The Steel Tariffs: We Have A Temporary Reprieve, But Will Trump’s Proposed Tariffs Affect Canadian Real Estate?” ) Last month the unthinkable did happen when US President Donald Trump slapped tariffs on some $20 billion worth of Canadian steel and aluminum.
In March when the Trump Administration first touted the tariffs, the National Association of Home Builders (NAHB) slammed the plan, which proposed a 25% tariff on steel and 10% tariff on aluminum. “Tariffs hurt consumers and harm housing affordability” Randy Noel, the chairman of the NAHB said.
On July 1, in response to the US tariffs on Canadian steel, Canada imposed a 25% tariff on US Steel imports. The Trudeau government is also said to be preparing quotas and tariffs for other countries to prevent a flood of steel rushing in to undercut prices.
The current tariffs in place will jack up prices for everything from rebar used in high rise condos, to structural steel for industrial builds. This does not bode well for a market that is already facing shortages due to higher demand and soaring prices – the Canadian Coalition for Construction Steel which represents 17 steel making companies laments that the price of steel has already soared by about 38% this year due to a booming property market and lack of supply.
The retaliatory tariffs imposed by the Canadian government have been widely criticised by the steel industry. “If the government’s not careful, they will protect one at the expense of ten times that elsewhere,” said Walter Koppelaar, CEO and Chairman of a large Ontario based steel construction company, Walters Inc. “If they apply duties to broad-spectrum steel or metal of any shape, size or description, our industry would be decimated – it could be thousands of layoffs and it’s going to shut down projects right across the country” he added.
Domestic mills supply roughly 10% of structural steel and about 50% of rebar. Their margins on imported steel are very slim, and the 25% tariff would lead to a lot of hardship and possible bankruptcies.
Locally, the tariffs on steel would hit BC very hard as historically the province has relied on imports for more than 60% of its annual consumption. Expect the cost of building to go up and the increase to be passed on to the consumer.
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