By Marc Huminilowycz
‘Buying Canadian’ is a noble pursuit, but suppliers are caught in the middle
Back in 1969, when the late Pierre Elliott Trudeau, Prime Minister of Canada, travelled to Washington to meet with President Richard Nixon, he said something that came to define relations between Canada and the U.S.: “Living next to you is in some ways like sleeping with an elephant. No matter how friendly and even-tempered is the beast, one is affected by every twitch and grunt.”
Today, under the second Trump administration, the elephant is twitching and grunting like never before. The NAFTA honeymoon is over, as our neighbour to the south has been threatening and/or imposing stiff tariffs on Canadian-made goods, while our government is countering the threat with its own taxes on U.S. imports, and some provinces even banning U.S. products outright.
While it is an admirable and patriotic rallying cry, “Buy Canadian” presents a complex challenge for Canadian industry manufacturers and suppliers currently facing tariffs on the raw materials and components they need to manufacture and assemble their products, and on the sales of their products into the lucrative U.S. market.
The North American auto sector exemplifies the conundrum. Vehicles made here are assembled via a complex web of interconnected supply chains that use raw materials and parts suppliers from across the continent. An infographic created by the Automotive Parts Manufacturers’ Association illustrates the complexity of a typical rear suspension assembly. Of the 16 components, seven are made in the U.S., six come from Canada, and three from Mexico.
The economies of Canada and the U.S. have been interconnected for so long that it’s almost impossible to find a Canadian-made product that contains 100% Canadian components. Under the Consumer Packaging and Labelling Act, a “Product of Canada” label means that at least 98% of the total direct costs of producing the item were incurred in Canada. Essentially, it was made in Canada by Canadians, with negligible imported elements. “Made in Canada,” meanwhile, means that at least 51% of the total direct costs of producing or manufacturing the goods have been incurred in Canada.
In Canada’s residential building sector, there are many stories of industry suppliers that have succeeded in manufacturing and distributing their products in this country as well as marketing them locally and globally. Napoleon, a name synonymous with superior “Made in Canada” quality, grew from humble beginnings in 1978 as a small steel fabrication business in Barrie to a major international company with a 1.4 million-square-foot plant manufacturing grills, gas fireplaces, outdoor living products and heating/cooling equipment for markets in Canada, the U.S., and Europe.
In St. Thomas, GCW Custom Kitchens, founded in 1999, manufactures mid- to high-end custom products for the retail market and wholesale kitchens under its Milestone Kitchens & Cabinetry brand, and has a commercial division. Its product line is comprised mainly of Canadian materials. Ontario brick manufacturer Brampton Brick, whose Canadian roots date back to 1871, operates a 400,000-square-foot brick plant in Brampton, Ontario, the largest in North America, as well as concrete and masonry products also made in Ontario. The company’s bricks are made from unrefined shale from its Ontario quarries.
Also in Ontario, Shouldice Designer Stone is a third-generation family-owned and operated company that has been manufacturing stone veneers and architectural products for over 70 years, shipping its products across North America. And Owens Corning Canada, while an American company, has been manufacturing its Pink Fiberglas and other energy-saving products for over 50 years at plants in Toronto, Edmonton and Sarnia.
Like other industry suppliers, Canadian companies that manufacture, assemble and sell products to home builders and renovators are feeling the strain of looming tariffs and the scrutiny of their Canadian content these days. While their companies are 100% Canadian-owned and their products are manufactured here, many rely on parts and products imported from the U.S. How have they been affected by tariffs? Are they absorbing the extra costs or raising their prices to compensate? Is it changing their thinking about how they approach the future? Are they looking for more local or international products to offset the potential of future U.S. issues?
The cross-border nature of modern manufacturing and distribution is posing a particular challenge for Phantom Screens.
Screening Costs
Phantom Screens is a wholly owned Canadian company with a head office and manufacturing facility in B.C. that sells screen products primarily in North America but also worldwide. Stephen Attfield, president of Ontario Screen Systems Inc., Phantom’s authorized distributor in Ontario, describes the manufacturing of their products as a cross-border process.
“Phantom’s aluminum is smelted in Canada, extruded in the U.S., then assembled in Canada. The fibreglass used for some products also comes from the States,” he says. “Because Phantom Screens is facing tariffs from both sides of the border, I think it will ultimately affect product costs, but not yet. Right now, Phantom is trying not to be too reactive, absorbing some costs, particularly for American distributors, who represent about 80% of the company’s business. But there’s a lot of uncertainty about the future. Our biggest worry is that we will have to eventually increase our prices.”
Attfield believes Phantom will have to look more locally at some point, but he acknowledges the difficulty in doing so when it comes to quality control, existing contracts and volume needs. “Right now, Canadian supply is just not big enough to meet Phantom’s supply requirements,” he says. “It won’t happen that fast.”
Pollard Windows & Doors is a 77-year-old, fourth-generation, 100% Canadian-owned company that manufactures its premium products in its 350,000-square-foot plant in Burlington. As is the case for many other Canadian door and window manufacturers, all of Pollard’s window glass comes from the U.S.—and that is a big problem according to Pollard President and CEO Karen Pollard-Josling.
With no window glass manufacturing in Canada, companies like Pollard (founded by Reginald Pollard in 1948) will have a hard time avoiding tariffs.
“There is no window glass manufacturing in Canada,” Pollard-Josling explains. “Although we have Canadian suppliers for other raw materials, and can also get them from other countries like Europe, tariffs on the American glass that we use are imminent and problematic. Tariffs will have a significant impact on Canada’s window and door industry. Our association, Fenestration Canada, is currently lobbying the government on our behalf to reconsider counter-tariffs on glass, specifically glass with HS (Harmonized System) codes. We’re buying our glass in U.S. dollars, which compounds the problem, and we have suggested to one supplier that they should open a plant in Canada. Windows are becoming more and more modern and much larger. We need glass to continue supporting Canada’s residential building industry and get people into homes.”
Pollard-Josling believes that to be competitive in the long run, Canadian window and door manufacturers need to buy as much of their materials as possible in Canada. “We’re not sure how we’re going to deal with the glass tariffs, and steel and aluminum tariffs will also impact our supplies,” she says. “So far, we haven’t increased our prices, and we’re actively seeking contacts for other sources of glass. We’re hoping the situation is temporary.”
Andrew Borsk is V.P. of Marketing and Merchandising for TG Appliance Group Inc., an appliance retailer in Brampton with 13 Tasco and Goemans stores across the province. According to Borsk, appliance retail pricing and promotions are tightly controlled by manufacturers. “With tariffs looming, we’re waiting to see what our U.S. manufacturers will do next,” he said. “It may take a few weeks before everything shakes out, and we’re engaging in ongoing negotiations with them to hold pricing on our existing and future orders.”
Borsk notes that for TG Appliance’s biggest sale of the year, the company managed to get almost all U.S. manufacturers to lock in their pricing. “How long they will do so depends on the brand, but in the longer term, if they change their pricing policies drastically, we won’t be able to absorb the increased costs. We recognize this could mean cancelled orders or pivoting to non-US-made products, but the knock-on effect of that is potential supply issues down the road. With our commercial customers, including home builders and renovators who require more high-end products with longer lead times (one year to 18 months), this adds an extra level of uncertainty.”
The Patriotic Edge
Family-owned Hewson Brothers Building Supply, which traces its local roots to 1915, has also benefitted from predictable costs—for the time being anyway. “We’ve been lucky in that our buying group, AD Canada, which really prioritizes our Canadian supplier relationships, has helped us hold our pricing,” says Beth Marchant, marketing manager at Hewson, which features two main outlets in Brantford and Cambridge and a specialized acoustic solutions location in Concord. “With the industry’s largest ceiling supplier being American and imported in, we do expect that area to be impacted since there aren’t many equivalent Canadian options. But we have always offered some manufacturers that are primarily made in Canada, like Soprema for our insulation and vapour barriers, and Bailey Metal Products. As for the latter, the steel pricing will impact them before us, so communication on how they plan to ride out the wave will be incredibly important. Some of our American suppliers are currently eating some of the additional costs, and in that respect, relationships help. Hewson Brothers has been in the building supply side of things for over 40 years and has maintained many of the same supplier relationships the entire time. But we’ve been told there will eventually be price increases.”
Being small means Hewson can stay nimble, says Marchant. “We don’t have as much red tape as some of our fellow building supply companies that have been bought out by large corporate American companies. If you are looking for Canadian options for building materials, it’s definitely more limited than in the past—it’s pretty much us and Home Hardware. And people are leaning into their patriotism. We’ve had several new customers who like the idea of buying Canadian materials from a Canadian supplier, delivered by a locally based team, and where their money stays in Canada.”
Oakville Stamping & Bending Limited (+osb), a 100% Canadian-owned and operated company founded in 1975, is a leading manufacturer and distributor of plumbing products, including waste and water overflows, traps, lavatory drains, tubular brass fittings and other items. They manufacture and supply to some of the largest OEM brands in the world. When asked how +osb may be affected by tariff threats, Chief Operating Officer Kevin Ernst replies, “We’re very concerned—about both our U.S. sales and the increased costs of some American products coming in. Canadian-made has been our target for many years, and we do manufacture a large percentage of our products in Canada. We do our own injection moulding, machine shop, fitting, manufacturing and assembly, but some products we carry, like brass fittings, don’t contain enough content to claim they’re Canadian-made.
“Our original Island Tub Drain was groundbreaking, creating a new category and setting the industry benchmark for freestanding tub drains,” Ernst adds. “There is now a 25% tariff on the steel in this product, which our company has absorbed for now, but we may have to increase the price if tariffs go higher.”
Oakville-based plumbing products manufacturer and supplier +osb is facing a 25% steel tariff on its popular Island Tub Drain.
One Canadian supplier sector that will undoubtedly feel the pain of tariffs is hardwood flooring. While a few Canadian companies manufacture flooring made of native hardwood species like maple, red oak and ash, premium species like white oak, hickory and walnut are preferred for premium homes. And those strains are only available from the U.S.
One wood flooring industry representative, who requested anonymity, remarked that his company’s building clients have long perceived his U.S. hardwood flooring as a premium North American product made in Canada. “If you look at a tree map of North America, you’ll see that 80% of softwood sits in Canada, while 80% of the hardwoods preferred for flooring grow in the U.S. I don’t know many Canadian floor manufacturers who don’t source their wood from around the world.”
The representative admitted that his company faces tariff concerns from both sides of the border. “People have their opinions on the issue, but because we have loyal clients in Canada and the U.S., we’re staying neutral and not taking sides,” he says. “Moving forward, we’re looking for some sort of stability before we make any long-term plans.”
The sooner this full-blown U.S.-Canada trade war is over, the better. As of late April, negotiations were taking place between the two governments and associations representing industry groups. However, the unpredictable nature of the American president will make planning for the future rather difficult—and anxiety-filled.
Far beyond the mere twitches and grunts of the Pierre Trudeau-era elephant, this particular pachyderm has been on the rampage. And despite their best efforts, suppliers on both sides of the border are getting stomped in the process.
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