Canadian Construction Association – Preparing your business for potential tariffs: What you need to know

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Preparing your business for potential tariffs: What you need to know

With the announcement of a proposed 25 per cent tariff on all imports from Canada and Mexico by U.S. President-elect Donald Trump set to take effect on January 20, 2025 (unless border issues are addressed), many businesses are starting to assess how these changes might impact them.

While these tariffs have not been finalized and will require negotiations between the two sides, it’s always wise to be prepared.

The Canadian Construction Association (CCA) offers the following tips to help construction professionals navigate potential changes in tariffs and protect their businesses.

For existing contracts: What you should know

• Review your contract: Check if your contract includes provisions for price adjustments due to changes in taxes and customs duties, such as paragraph 10.1 in CCDC 2—Stipulated Price Contract or CCA 1—Stipulated Price Subcontract. Remember to review the supplementary conditions even with standard CCDC and CCA contract forms.
• Contracts without duty provisions: If no duty provisions are included, contractors may be liable for covering the increased costs.

CCA encourages owners to fairly consider requests for price adjustments if contractors are facing unforeseen cost increases due to tariffs.

For new contracts: How to address tariff uncertainty

• Raise the issue early: If the contract for a potential project lacks duty provisions, especially if you’re aware of upcoming changes to taxes or customs duties, formally bring this to the owner’s attention.
• Include duty provisions: Encourage the owner to include duty provisions or address this uncertainty in the bid documents. Look to GC 10.1 of CCDC 2 for standard, industry-accepted wording.

Other considerations: Key points to remember

• Argue for cost recovery: If you’re facing unforeseen costs due to increases in taxes and customs duties, you may have a case for recovering additional costs. However, without clear duty provisions in the contract, this may be challenging.
• Cost recovery due to delays: If a project experiences changes, delays, or suspensions that postpone material purchases and result in escalated costs, contractors might be able to recover these additional expenses, depending on the contract and situation.

Final tip: Always read your contract

The most important piece of advice is to carefully read and understand your contracts. To help you with this, check out CCA’s five-part “Read your construction contract” webinar series.

Staying informed and prepared will help your business navigate potential tariff changes with confidence.