New Brunswick businesses brace for higher costs after Trump's latest trade tirade

Businesses large and small in New Brunswick are bracing for potentially higher costs as the result of U.S. President Donald Trump's latest trade tirade.

Companies that buy steel and aluminum in the province are the latest to find themselves on the receiving end of Trump's fury.

Fredericton engineer Rob Hoadley of Argyll Associates Ltd. says the tariffs — 25 per cent on steel and 10 per cent on aluminum — make it harder for him to craft reliable cost estimates for the plumbing, heating and ventilation systems he designs.

"We have no real idea how to estimate the cost of projects we are designing right now," he said Monday.

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Hoadley designs the systems and comes up with an estimate based on a standardized industry price guide, with steel and aluminum often making up 15 to 30 per cent of the total.

A contractor will then order the materials and do the work.

But the end customer, the owner of the building, is now faced with the possibility the final cost will be far higher than the initial estimate.

"They have to be aware of this large uncertainty on the market right now," Hoadley said. "It might have no effect. The nature of what's going on in the United States is that this could change tomorrow and be eliminated. Or it could be doubled. Who really knows?

"They just have to be aware of that when they're planning on building a building."​

Trump announced the tariffs at the end of May, using an obscure national security regulation to impose them despite the North American Free Trade Agreement. He also applied them to Mexico and the European Union.

Prime Minister Justin Trudeau responded by announcing equivalent tariffs would be put on U.S. goods starting July 1.

Trudeau and his officials hoped the weekend's G7 summit would allow world leaders to persuade Trump to dial back the measures.

Instead, Trump launched a Twitter tirade against Trudeau on Saturday that said the U.S. tariffs were actually retribution for Canada's supply management system for dairy products.

The tariffs have also been described by U.S. officials as a way of pushing Canada and Mexico to move faster on renegotiating NAFTA, and a way for Trump to show he won't be weak in dealing with North Korea.

Extension to fabricated steel 'would be really painful'

Hans Klohn, the president of Saint John-based Ocean Steel, said so far the company is not feeling any direct pain from the tariffs but "our concern is that this will grow into more than it is."

The U.S. tariffs apply to raw Canadian steel, not fabricated steel, which is what Ocean Steel exports south of the border. Klohn said the U.S. northeast and mid-Atlantic makes up about 75 to 80 per cent of the company's market.

'We're hopeful that this will cool down and this is posturing for NAFTA negotiations.'- Hans Klohn, president of Ocean Steel

But "we're quite concerned that this could possible escalate to include fabricated, structural steel, which would really be painful for us," he said.

"We're hopeful that this will cool down and this is posturing for NAFTA negotiations."

Ocean Steel is more likely to be affected by the Canadian retaliatory tariffs, which will drive up the price of the raw steel that the company imports.

"We'd like to understand which particular materials are included in those retaliatory tariffs," he said. "The Canadian government is looking to ensure that their tariffs do not negatively affect Canadian producers."

Ottawa is now consulting the industry on what that impact could be.

Trickle down effect

Hoadley said even if the tariffs only apply to raw steel, they will still drive up costs if he wants to use a fabricated product from one country that used raw steel imported from the other.

He's now working on a project that will include 4.9 kilometres of pipe, so the impact of Trump's seemingly offhand decisions on trade are real.

"It's easy enough to say these things, 'We'll slap a tariff on Canada,'" Hoadley said. "Eventually it trickles down to the fella who's building a six-storey apartment building, and all of a sudden his costs have gone up five per cent," he said.