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Tariff relief, or not?

After almost an entire year having to deal with steel and aluminum tariffs, it has come to an end. On May 21, 2018, the Donald Trump administration announced that tariffs would be applied to aluminum at 25 per cent on imports, and 10 per cent for steel imports. This was allowed based on an archaic American law that allowed tariffs to be applied in the case of national security.

In response, the Trudeau government retaliated in tit-for-tat style with their own tariffs on American imports. Manufacturers that buy Canadian steel but manufacture in the U.S. would be hit twice when shipping back products to Canada. Some companies lost a substantial amount of money resulting from the tariffs and were forced to absorb the cost. Some water heaters fall into this category.

At first glance, now that these tariffs have been repealed, I had originally thought that everything would go back to the way it was before Trump introduced them. But from the conversations that I’ve had with industry people, this isn’t exactly the case. Yes, there was relief felt in the industry since the tariffs have been removed. But during the era of American/Canadian steel and aluminum tariffs, steel costs increased, and this hasn’t changed either since the tariffs were repealed. “Things are not back to the way things were before because when the tariffs were imposed it caused the steel prices in the U.S. to increase… One of the impressions was that when the tariff came off the full 10 per cent that was imposed would come off. It can’t because in the middle of that period we had a price increase which is still there,” reported Paul MacDonald, president of Bradford White Canada, Halton Hills, Ont.

The tariffs allowed an opening in the market for tankless water heaters, resulting in a sales boost. The industry has balanced itself out again. But during the time of the tariffs, manufacturers were unfairly impacted if they were in Canada or the United States and rather favoured manufacturing in Mexico.

Whether or not the industry will ever go back to how it was remains to be seen. But at least for the short-term, prices will likely remain higher as a result of the tariffs.

 

Source :plumbingandhvac .ca/