Contractors working on projects for the Yukon government may be exempt from having to pay tariffs on steel and aluminum.
The government said construction contracts include a clause which stipulates that contractors will be protected from any increases in material costs due to tariffs.
“In each case a contractor would give (us) notice that they have been charged the tariff and then they provide the project manager the evidence, like a receipt that shows the cost,” said Alicia Debrecini, spokesperson for the Department of Highways and Public Works.
“And a change order could be done so that [the Government of Yukon] could pay that difference as per the contract.”
On June 1 U.S. President Donald Trump imposed tariffs of 25 per cent on steel imports and 10 per cent on aluminum, citing “national security.” The Canadian government said it will impose retaliatory tariffs on July 1.
The price of steel has already risen up to 40 per cent since January. There’s speculation that suppliers raised costs in anticipation of the incoming tariffs. Joe Zuccarini, project manager at Duncan’s Limited a Whitehorse welding firm, said the price has been fairly stable for the last five years.
“I think it’s absurd that we have tariffs because of national security…. It’s ridiculous.”
The territorial government said the Yukon’s provisions only apply if the change in material price is a result of a tariff, not just fluctuation in the global market.
Wayne Tuck, manager of engineering services for the City of Whitehorse, said he doesn’t believe the city has a similar clause built into its contracts.
Tuck said contractors are paid a lump sum for the job, and fluctuating prices is a risk builders take.
“I certainly feel sorry for the contractors, but at this time I’m not sure if there’s anything we can do,” he said.
The city receives funding from the Yukon government for some of its projects, but Tuck said the city is responsible for administering all of the contracts.
Philippe Vincent is a project manager at Klondike Welding. His company has been working on the city’s new operations building. The project requires a million pounds of steel.
“Right now that extra money is coming out of our pockets, which is big, big, big money,” he said.
“(A solution) would actually save us so we can still keep our margins and do our work like we’re supposed to.”
In a letter to Yukon Premier Sandy Silver dated June 11, Yukon Party interim leader Stacey Hassard expressed his concerns about the impact tariffs on aluminum and steel will have on local businesses and requested that the government include provisions to protect against price fluctuations.
“There’s been cases where the government has put in a fuel calculator index for price fluctuations,” Hassard said in an interview June 13.
“So this is just an idea, to kind of give the government somewhere to start if they haven’t already started themselves.”
Debrecini said the government has agreements to provide fuel at pre-arranged prices to suppliers when required. Prices are checked every two weeks and adjusted accordingly for increases and decreases greater than one cent. The government does not have have similar agreements for purchasing steel.
Zuccarini and Vincent said ultimately the additional costs will fall on consumers.
Peter Turner, president of the Yukon Chamber of Commerce, said starting July 1 the Yukon will likely see an increase in cost of things like appliances and camping gear when Canada implements their reciprocating tariffs against U.S. steel and aluminum. Canada exports a large amount of its steel to the United States, and he said there will likely also be slowdown in the industry and job losses.
“Nobody wins on (a trade war),” said Turner. “That’s why in general, for the last 50 years, the industrial world has focused on reducing tariffs and putting in place free trade as much as possible.”
Turner said this is not just a territorial challenge. The federal government is in a period of consultation, and has invited businesses to write in with their comments and concerns.
The Government of Yukon has provisions to protect contractors from financial losses, but companies are still likely to feel the impact of tariffs.
“Really what it comes to in Canada (is) can businesses pass along their increased costs to their end consumers?” said Turner.
While the Yukon is not a producer of steel or aluminum, the territorial government has signed a joint letter to Trump from the Pacific NorthWest Economic Region, expressing its concern about the trade dispute. “Our economy does best when Canada as a whole does well,” Yukon cabinet spokesperson Sunny Patch said in an email.
The Yukon Party has also talked to people in industry with their own concerns, and wants to help in any way that benefits the Yukon economy, Hassard said.
“We certainly hope that it doesn’t have too many negative impacts on us here in the Yukon, but time will tell.”
Contact Kallan Lyons kallan.lyons@yukon-news.com