A big sigh of relief was heard throughout the HVAC/R industry after almost an entire year of U.S. imposed tariffs applied on Canadian steel and aluminum.
On May 31, 2018, the United States announced that tariffs of 25 per cent on imports of Canadian steel and 10 per cent on imports of Canadian aluminum would take effect the next day, citing national security concerns. This resulted in a tit-for-tat style response from the Canadian federal government which issued their own tariffs totalling $16.6 billion on imports of steel, aluminum and other products from the United States.
Some manufacturers were affected by the tariffs twice. Once if Canadian steel was shipped to the U.S. for manufacturing. And then a second time, when the product was manufactured and shipped back to Canada for sale to Canadian customers.
“The steel and aluminum tariffs adversely affected many companies in Canada that buy steel from both Canada and the U.S.,” reports Paul McDonald, general manager of Bradford White Canada, Halton Hills, Ont.
On May 17 Canada and the United States finally reached an agreement to eliminate all tariffs imposed from both countries. Prime Minister Justin Trudeau made the announcement in Hamilton, Ont., after a phone call in the morning with U.S. president Donald Trump, reported the Heating, Refrigeration and Air Conditioning Institute of Canada (HRAI).
“There was no one breakthrough moment. Lots of conversations with the president over the past week and an understanding as well that these tariffs were harming workers and consumers on both sides of the border,” Trudeau said. “As we look at moving forward with the new NAFTA, it didn’t make a lot of sense to continue to have tariffs on steel and aluminum between our countries.”
This doesn’t mean that the things are completely back to normal. The imposition of tariffs affected steel prices. Prices went up. Canadian equipment suppliers have had to juggle these increases as well as the retaliatory tariffs imposed by Canada. Even though tariffs have now been removed, steel prices haven’t gone back to normal, explained McDonald.
There was a sense of relief after the tariffs came off because there is a more balanced market within the countries. However, there is doubt that the industry will return to how it was pre-tariffs. Pricing usually stays flat or goes up.