Limitation: the following information is being shared as information for MCABC members and does not constitute and should not be considered as legal advice. It is important to note that the terms and conditions of any contract take precedence over any information contained below. We encourage all members to use their independent judgment or, as appropriate, seek the advice of qualified professionals.
Vancouver, B.C. — Today, September 8, previously announced Canadian counter-tariffs came into effect on $28 billion worth of U.S. imports. The U.S. responded with plans to ban Canadian products from U.S. government contracts and block certain Canadian imports outright.
While it remains to be seen how the situation will play out in the short and long term, there is no doubt that a prolonged trade dispute between Canada and the United States will have a significant impact on B.C.’s mechanical contracting industry.
As we await further developments, we are sharing more information and member resources courtesy of the Mechanical Contractors Association of Canada (MCAC), in addition to those we shared two weeks ago.
Important Considerations Regarding Contracts
Amidst the ongoing trade dispute, members should be aware of the following contract considerations affecting both current and future projects:
- For projects already underway (where the bid closing date was prior to the imposition of tariffs), it is critical that contractors review their existing contract language to determine whether there are any contractual provisions that deal with the issue of duties and tariffs.
-
- As an example of a duty provision, CCA-1, in GC 10.1.2, notes that Any increase or decrease in costs to the Subcontractor due to changes in taxes and duties after the time of the bid closing shall increase or decrease the Subcontract Price accordingly.
-
- Other contract forms may contain similar provisions, but it is important to also note and understand when the provision takes effect (i.e. taxes or duties will have come into effect after closing).
- Contractors may also wish to explore or discuss with owners/prime contractors whether provisions such as force majeure clauses or change-of-law provisions address the issue of tariffs.
- For those entering into a new contract, it is advised to work with suppliers to lock-in pricing, to mitigate the impact of price fluctuations.
- Another consideration is the use of price escalation clauses, e.g. the required notice that would be necessary to adjust a contract price.
As with any other change in contract price, contractors should also be aware of their insurance and bonding requirements and whether existing contract security is directly related to and affected by Contract Price.
Documentation of Tariff-Related Price Increases
With Canadian countermeasures expected to impact several products and materials in the mechanical industry, it is advised that members seek express reference to tariffs in any instances of price increases.
While some standard-form contracts contain duty or change-of-law provisions, any price increases that do not reference tariffs will impose an unfair risk to contractors who may not be able to exercise those contract provisions. Citing tariff-related issues, such as the value of the Canadian dollar, transportation costs, or tariffs themselves, may provide an opportunity to exercise price escalation provisions.
We encourage the industry supply chain to explore the available tariff-relief programs as the industry navigates the challenges brought on by US tariffs.
As before, we recommend that members undertake all efforts to document and record the types of products affected by price escalation and relay this information to MCABC.
Remissions Process
A full list of products impacted by Canadian countermeasures is available through the dedicated Government of Canada webpage.
The Department of Finance has implemented a remissions request process, through which companies can request a reprieve where goods cannot be reasonably sourced from within Canada or from non-US suppliers.
Upon notification of a price increase, members should inquire whether an application for remissions has been made and request relevant documentation that demonstrates a particular product cannot be sourced from within Canada or non-U.S. suppliers.
All efforts should be made to encourage the use of this remissions process, particularly when products or materials are not available from non-U.S. markets, or where alternative products would not meet Canadian safety certification standards.
Next Steps
The escalating trade dispute remains a fluid and evolving challenge that member businesses must navigate on a daily basis.
MCABC is actively monitoring the dispute’s impact on the industry, as well as broader construction activity and costs, and is advocating on behalf of industry to limit the dispute’s negative consequences.
As always, we encourage MCABC members to reach out with any questions, concerns, or information they may have regarding the situation’s impact on their business.
About MCABC
The Mechanical Contractors Association of B.C. (MCABC) is the only dedicated representative for the mechanical contracting industry in British Columbia—the industry with the largest share of skilled trades workers in the construction sector. As the connection to industry excellence for our diverse membership, we deliver education and professional development programs that enable high standards of practice and business success. Through advocacy and strong industry partnerships, we influence policy and regulatory development at all levels of government, advancing the interests of our industry and improving its ability to meet B.C.’s growing infrastructure demand.
Media Contact
Conor Brendan Dunne
Manager, Communications & Stakeholder Engagement
cdunne@mcabc.org
(604) 205-5058
