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Condo buyers will bear the brunt of Canada-U.S. trade war
7/6/2018 | Posted in New Developments by Paul DeAdder | Back to Main Blog Page
In response to U.S. president Donald Trump’s decision to slap taxes on goods from north of the border, Canada enacted a 25% tariff on U.S. steel imports on July 1 – a move that observers warned may further squeeze the country’s already beleaguered housing market as the levies are predicted to push up the costs of construction material.
Condos are expected to be the most deeply affected sector, as the tariffs will significantly impact the prices of structural steel products like rebar and industrial building components.
This is on top of the already steep increase in the price of construction steel (approximately 38%) this year due to scarce supply amid robust property markets nationwide.
“If the government’s not careful, they will protect one at the expense of ten times that elsewhere,” according to Walter Koppelaar, CEO and chairman of Ontario-based steel construction company Walters Inc.
“If they apply duties to broad-spectrum steel or metal of any shape, size or description, our industry here would be decimated – it could be thousands of layoffs and it’s going to shut down projects right across this country,” Koppelaar told Bloomberg, adding that domestic mills produce only about one-tenth of the structural steel and around half of the rebar circulating in the Canadian steel industry.
In particular, British Columbia – which imports over 60% of its steel annually – will be hit hard by the levies, according to B.C.-based rebar fabricator and installer Midvalley Rebar.
“If they put this quota or tariff on imported materials, we will have no supply,” Midvalley president Anoop Khosla said, adding that more than half of his company’s supply comes from sources abroad, including Indonesia, Turkey, and Vietnam. “We would have shortages of material come September, October.”
An Altus Group analysis warned that while rebar only accounts for around 4% of a project’s cost, the tariff will lead to a 1% increase in the overall costs of a building – costs that might be passed on to buyers.
