Following the U.S. presidential elections and inauguration on January 20, Canada is bracing for potential U.S. tariffs. If implemented, Canada is considering countervailing tariffs and protective measures. There is significant uncertainty regarding the timing and potential impacts that may arise. Events remain fluid and may change quickly.
Potential Risks
Many construction projects in Canada depend on U.S.-sourced materials and products, and any tariff implementation could have wide-reaching effects. Potential impacts on construction project materials or products include:
- Increased costs due to higher tariffs on materials
- Delays in material availability or shortages
- Labor shortages in certain sectors or regions
- Impacts to cross-border spending that may impact capital project owners’ decisions to invest in construction projects, as well as potential impacts to their revenue streams, which in turn affect project funding or schedules
Under most Canadian Construction Document Committee (CCDC) contracts, unless otherwise modified, the risk of changes to tariffs is borne by the project owner rather than the contractor. These contracts often include provisions that allow for adjustments in contract price in response to changes in taxes, duties or tariffs after bid closing.
Mitigations
Our project teams are currently working with owners to assess the potential risks posed by looming tariffs and identify possible mitigation strategies. One of our key recommendations is to see that appropriate contingencies are held to address tariff-related impacts.
Depending on the stage and nature of a project, additional mitigations could include:
- Procuring materials ahead of potential tariffs
- Identifying alternative materials or suppliers to reduce dependence on tariffed goods
- Evaluating procurement schedules to manage the timing of material purchases and price volatility
Our teams are in regular communication with our clients and their supply chain providers to stay informed about potential changes and to maintain active risk management approaches.
Ongoing Support
We will continue to monitor developments relating to tariffs and provide further guidance as the situation evolves. In the meantime, our advisors and project managers are available to respond to specific queries or to share market intelligence.