Ottawa to conduct immediate public review of new Western Canada drywall tariffs

The federal Liberal government has asked for an immediate public interest review of the new tariffs recently imposed by the Canadian Border Services Agency on drywall imported from the U.S.A. into points west of Manitoba, ahead of the final Canadian Trade Tribunal ruling.

Although these new tariffs are currently preliminary and subject to investigations and representations by interested parties in early December, the magnitude of outcry from both consumers and the building industry has led to Finance Minister Bill Morneau requesting an earlier look at the file. A final decision on the tariffs is still scheduled to be announced in January.

Many builders and drywall installers were caught flat-footed by the tariffs imposed on September 6. Some contractors working on fixed contract terms have complained publicly that their projected profits were immediately sliced with no warning. Beyond the immediate impact, concerns were raised that home owners would have building and renovation costs escalate dramatically.

Drywall prices have skyrocketed 80% since September 6^th
In fact, Canadian Contractor has been monitoring the price of drywall across the country since the tariffs were imposed in Western Canada. Using a standard 4 x 8 – -inch sheet of U.S.A.-made ‘Sheetrock’ drywall as a benchmark, we found prices in sample outlets in Calgary and Vancouver have skyrocketed 80% in 6 weeks (from $7.49/sheet to $13.49/sheet). Meanwhile, prices for the identical product over the same period actually dropped in Orillia Ontario by 6%, and have remained relatively stable in sampled U.S. locations.

The CHBA says the tariff has resulted in supply issues in some areas.

Fort McMurray particularly impacted by higher costs
The outcry in the Fort McMurray/Wood Buffalo region was perhaps the strongest expressed. The city was devastated by wildfires that leveled many homes and businesses in the area this spring, and rebuilding is only just under way. The Canadian Home Builders Association has suggested that in addition to additional cost, shortages of drywall have caused construction delays there and around the West.

One website contrasted Prime Minister Justin Trudeau’ pledge to match public donations to the Red Cross ($30 million) for Fort McMurray with federal funds to the new drywall tariff, saying: “Drywall is a big part of construction to homes around Alberta, this new tax on drywall will cost Fort McMurray all the money the Feds have donated in tax form, Trudeau is making a large transaction from this, Fort McMurray has not been exempt from this tax even though 1000’s of homes must be rebuilt.” The Finance Minister in fact acknowledged the hardships faced by Fort McMurray in statements made to the media.

What is ‘dumping’ and why did this happen?
‘Dumping’ is a trade term used when a foreign manufacturer sells an identical product into another country at prices below that available in its home country. This specific tariff was imposed when CertainTeed Gypsum Canada applied for protection from half a dozen U.S. manufacturers it claimed were dumping drywall into Western Canada, thus allegedly putting the viability of their Western Canadian manufacturing plant in jeopardy.

Interestingly, a tariff of 125% was imposed on CertainTeed Canada’s sister company in the U.S., even though it not been named in their original application. Furthermore, the tariff is unusual in that it only applies to drywall crossing into Canada at border points west of Manitoba.

Canadian Contractor continues to monitor this story, with regular updates expected.

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