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January 24, 2025

Navigating Tariff Changes: Essential Steps for Your Business

Getting Ahead of Potential Tariffs: A Guide for Businesses

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), it’s crucial for businesses to prepare for the potential impact on operations and costs.

While these tariffs are not yet finalized and will require negotiation, taking proactive steps now will help ensure your business is ready for any changes.

The Canadian Construction Association (CCA) has provided valuable tips to help construction professionals address potential tariff changes and protect their businesses.

For Existing Contracts: What You Should Know

  1. Review Your Contract
    Check if your contract includes provisions for price adjustments due to changes in taxes and customs duties. For example, paragraph 10.1 in CCDC 2—Stipulated Price Contract or CCA 1—Stipulated Price Subcontract may provide guidance. Be sure to also review any supplementary conditions, even when using standard CCDC and CCA forms.
  2. Contracts Without Duty Provisions
    If no duty provisions are included, contractors may be liable for covering increased costs.
  3. Encourage Fair Consideration
    CCA encourages project owners to fairly consider requests for price adjustments if contractors face unforeseen cost increases due to tariffs.

For New Contracts: How to Address Tariff Uncertainty

  1. Raise the Issue Early
    If the contract for a potential project lacks duty provisions and you’re aware of possible changes to taxes or customs duties, formally bring this to the owner’s attention.
  2. Include Duty Provisions
    Encourage the owner to include duty provisions or address this uncertainty in the bid documents. Refer 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 could be more challenging.
  • Cost Recovery Due to Delays
    Changes, delays, or suspensions in a project that postpone material purchases and result in escalated costs might provide grounds for recovering these additional expenses, depending on the contract terms and specific circumstances.

Final Tip: Always Read Your Contract

The most important advice for construction professionals is to carefully read and fully understand your contracts. To help with this, CCA offers a comprehensive five-part “Read Your Construction Contract” webinar series, which provides practical guidance and insights.

Staying informed and proactive will empower your business to navigate potential tariff changes with confidence. For more resources and industry updates, visit the Vancouver Island Construction Association (VICA) website or contact our team for support.

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