Tariffs and turbulence: Trade tensions in Canada’s construction industry

Tariffs: A brief overview 

Tariffs introduced in early 2025 marked a significant shift for the Canadian construction industry. On March 6, 2025, the United States imposed tariffs on non-Canada-United States-Mexico Agreement (CUSMA) goods (except for energy and potash) at 25 per cent. Energy products imported under CUSMA faced 10 per cent duties, while certain potash products attracted 10 per cent tariffs. Additional measures followed on March 12, 2025, with steel and aluminum tariffs set at 25 per cent, later raised to 50 per cent on June 3, 2025. By the end of July, tariffs on non-CUSMA goods increased to 35 per cent and, as of August, copper products such as pipes and wires faced duties of 50 per cent. 

Canada responded on March 4, 2025, with retaliatory tariffs worth $30 billion on U.S. goods, including construction essentials such as timber, plywood and engineered wood products. The vast majority of these tariffs were lifted on September 1, 2025. Only the tariffs on steel, aluminum and autos have been maintained. 

The immediate consequences of these tariffs to the construction industry were higher material costs, material shortages and reduced investment. The tariffs led to increased costs for Canadian purchasers who relied on American construction inputs, leading to shortages in certain materials. The construction industry also received reduced investments as the broader Canadian economy contracted in the second quarter of 2025, largely due to these trade disruptions. 

Government responses 

Each level of Canadian government has taken their own initiative to respond to the trade tensions.  

At the federal level, on September 5, 2025, the Liberal government announced its “Buy Canadian” policy. The Policy on Prioritizing Canadian Materials in Federal Procurement prioritizes Canadian materials in federal procurement, particularly for defence and construction projects exceeding a specified threshold. Initially, the policy will be focused on steel and softwood lumber, but the policy is designed to be flexible and expand to other sectors as needed. Moreover, the Policy on Reciprocal Procurement, which is anticipated to be implemented by spring 2026, will limit non-defence procurements to Canadian goods and services, or those originating from Canada’s trade partners. Together, these measures could influence more than $70 billion in procurement.