The recent announcement of 25% tariffs on Canadian steel and aluminum by the U.S. has raised significant concerns across Ontario’s construction and manufacturing sectors. The Ontario Home Builders’ Association (OHBA) is particularly alarmed by how these tariffs could drive up costs, disrupt supply chains, and slow down housing development projects.
Rising Material Costs and Housing Affordability
The tariffs will likely result in higher costs for key construction materials, including steel and aluminum, which are essential for residential and commercial building projects. With steel playing a critical role in structural frameworks, roofing, and reinforcements, and aluminum being widely used in windows, doors, and electrical wiring, an increase in costs will make new housing developments more expensive.
These price hikes could have a direct impact on affordability, particularly in Ontario, where the housing market is already facing high costs and a growing demand for new homes. Developers might delay or scale back projects due to rising material expenses, leading to a reduction in new housing supply.
Effects on Ontario’s Economy and Workforce
Canada is the largest exporter of steel and aluminum to the U.S., and Ontario is home to some of the country’s largest steel manufacturers, including Stelco Inc. and ArcelorMittal Dofasco Inc. The new tariffs threaten to reduce the competitiveness of Canadian steel producers, leading to potential job losses and economic uncertainty in the province’s industrial hubs, such as Hamilton.
Chatham Daily News reports that the construction industry, which relies heavily on affordable and readily available steel products, could face widespread delays as contractors navigate supply chain disruptions. Increased costs will also make it harder for smaller construction firms to compete, putting additional pressure on an already stretched workforce.
Uncertain Trade Relations and Industry Response
The uncertainty surrounding trade policies and potential retaliatory tariffs from Canada has left many in the construction industry unsure about how to plan their projects. Some companies are exploring alternative suppliers from Europe or Asia, but bulk purchasing requirements and logistical hurdles make this a costly and complex solution.
“The uncertainty caused by potential tariffs on Canadian goods and newly imposed tariffs on China has made it very difficult for Canadian companies to plan, operate and stay competitive. With Canada caught in the trade crosshairs of the U.S. and China, industries that depend on suppliers and customers — such as manufacturing — are especially vulnerable to increased costs, delayed shipments, and disrupted production and planning schedules. Smaller suppliers with fewer options may struggle to absorb added costs, leading to a heightened risk of insolvency.”
National leader of KPMG | Alain Saways
Industry leaders are urging both the Canadian and Ontario governments to negotiate exemptions or find solutions to mitigate the economic impact. The OHBA is advocating for support measures that could include tax relief or subsidies to help offset rising costs for builders.
Potential Long-Term Consequences
Past tariffs have shown that trade restrictions on steel and aluminum can lead to widespread economic challenges. The U.S. imposed similar tariffs in 2018, which resulted in a nearly 40% drop in steel exports to the U.S. and a more than 50% decline in aluminum exports. If history repeats itself, the consequences for Ontario’s construction and manufacturing sectors could be severe.
Ontario’s steel and aluminum industries are highly integrated with the U.S. market, with approximately $20 billion in steel traded between the two countries annually. Nearly 40% of Canada’s steel is imported from the U.S., while 94% of Canadian steel production is exported south of the border. If these tariffs remain in place for an extended period, they could weaken Ontario’s economic growth and investment climate.
Conclusion: A Critical Moment for Ontario’s Construction Sector
The introduction of U.S. tariffs on Canadian steel and aluminum presents a serious challenge for Ontario’s construction industry. Higher material costs, supply chain disruptions, and potential job losses could have long-lasting effects on the sector. To mitigate these impacts, the industry is looking to government officials to take swift action in trade negotiations, while construction companies explore alternative sourcing and cost-cutting measures.
As uncertainty looms, Ontario’s builders, developers, and manufacturers must prepare for a shifting economic landscape. Whether through government intervention or industry adaptation, the response to these tariffs will shape the future of Ontario’s construction sector for years to come.
