The U.S.-imposed tariffs on Canadian goods and Ottawa’s retaliatory measures will impact facility management across North America. Industry members are now looking for ways to contend with the ramifications that come with supply chain disruptions and increasing material costs for construction projects.

“FMs should take the time now to re-assess their FM operations and seek C-suite support for additional funds and support to secure alternative suppliers,” says Marcia O’Connor, president of AM FM Consulting Group. “It’s a good idea to assess risk implications and develop a plan to ensure continuation of FM services.”

O’Connor, who is also lead instructor for the University of Toronto School of Continued Studies, Facility Management Certificate Program and Chair of Membership & Education for IFMA’s Greater Toronto and South Central Ontario chapter, recently conveyed how tariffs could influence particular areas of FM operations.

Tariffs on steel, aluminum, and other construction materials will increase costs for facility maintenance, renovations, and new builds. HVAC systems, fire safety equipment, and electrical components, many of which are imported, could become more expensive. Facilities also rely on imported cleaning supplies, furniture, lighting, and smart building technology and tariffs could drive up prices, leading to increased budget pressures. As well, energy-efficient upgrades, such as LED lighting and heat pumps may become costlier if tariffs apply to imported components.

She says managers may need to adjust budgets or renegotiate service contracts with vendors to account for rising costs. Some organizations may need to reassess in-house versus outsourced services to find cost efficiencies. As well, long-term capital planning may require higher contingency reserves to account for pricing volatility.

Diversifying suppliers and adjusting budgets

Industry members are already exploring Canadian-made products or alternative sourcing strategies to mitigate tariff impacts. Last week, during an online discussion hosted by IFMA’s Greater Toronto and South Central Ontario chapter, Hunter Kirkpatrick, director of reliability and operations facilities and sustainable infrastructure at Sheridan College, said he is increasing his rolodex of Canadian suppliers and working with his procurement team to specifically source within a 100-kilometer radius. He anticipates other FM industry members will be searching for Canadian-based providers as well.

“There’s going to be a very heavy increase in demand for our side,” he predicts. “I want to make sure we’ve diversified suppliers who can get us materials in a hopefully timely manner so we can manage expectations for our end users. “Canada has a lot to offer in terms of service, we just need to open up the doors and view those opportunities.”

Tariffs are also expected to directly hit post-secondary budgets, which are already constrained due to the cap on international students that was implemented by Immigration, Refugees, and Citizenship Canada (IRCC).

“The financial challenge is going to be keeping everything under budget,” says Kirkpatrick. “Normally, budgets will increase over a year-to-year basis to cover for inflation – it should go up by a couple of per cent, but that’s not the case for us right now. We’ve had a 10 per cent hit to our operating budget for the next several years to counteract the IRCC implications, but that, along with increased material costs, is going to be very very impactful.”

The possibility of derring projects could ultimately affect the day-to-day experience for students, staff and faculty.

Last week, before the tariffs even came into effect, Kirkpatrick described how contractors were not holding quotes that would previously be good for a month; instead, holding them for a few days or as little as 24 hours. “There are things we’re seeing that we haven’t seen before,” he said.

A.J. Killens, senior service account manager at Flynn, which provides a range of architectural products and roofing services, including metal paneling, contract glazing and curtain wall, says the tariffs will have a major impact on the construction industry.

Canada accounts for about a fifth of U.S. imports of steel, 50 per cent of aluminum imports and 30 per cent of lumber. With the additional 25 per cent tax, he said everything becomes more expensive, down to a small screw and plate, which could increase by 10 to 18 per cent depending on the supplier.

To mitigate risk, diversifying the supply network could mean veering away from the U.S. “Our increased material costs will be the biggest challenge. Hopefully the interprovincial trade barriers can be knocked down so we can purchase products within Canada,” he noted, adding that European commodities are the next best option, taking into account lead times on materials and project completion dates.

To further manage costs, contracts may also include new language with agreed-upon measures, such as splitting the difference of a tariff charge or transferring the cost to the building owner.

More strategies to navigate this uncertain economic era are outlined in a white paper by Albert Antelman, facilities architect and IFMA Senior Fellow
, titled, Impending Tariffs: Challenges and Opportunities for IFMA Members. Antelman advises partnering with other facilities or public works departments to buy materials and equipment in bulk, leveraging collective purchasing power to secure better pricing and avoid price hikes.

Mutual aid agreements are another tactic, such as establishing formal agreements with neighbouring facilities or public works departments to share resources during emergencies or supply shortages. “History hindsight, coupled with strategic foresight, can help facility managers not only weather the storm but also seize opportunities for innovation and resilience,” he writes.

Regional impacts and building economic resilience

The economy is expected to improve compared to last year with unemployment falling since November; however, the outlook is highly dependent on tariff scenarios,” said Scott Figler, research director for JLL in Canada

The impact of universal tariffs vary across regions, he noted during the webinar, which took place before the U.S. announced its 30-day tariff break from the auto sector.

“The bigger cities are mostly insulated because it’s a more diverse economy,” he said. “There are very large service sectors that aren’t as dependent on exports to the U.S.

Other regions tell a different story. Steel and aluminum tariffs will likely hit Southwestern Ontario the most, due to it having the highest concentration of manufacturing workers in Canada. The three most exposed communities are Windsor, followed by Brantford and Kitchener-Waterloo-Cambridge.

“Manufacturing as a share of total employment is much lower than what it was 20, 30 years ago,” he noted. “A lot of companies that had excess capacity or production that wasn’t being utilized have mostly purged that out of the system. The Canadian economy and regional economy of these cities is better positioned to absorb the shock now than they were in 1990.”

According to modelling estimates from the Canadian Chamber of Commerce, the tariff will impose the steepest hit for the value of Canada’s energy exports. The most vulnerable locations are Saint John, New Brunswick, and Calgary, Alberta—a major hub that exports crude oil and natural gas to the U.S. Midwest.

Within the uncertainty lies the potential to build economic resiliency. Figler said tariffs could force Canada too rethink interprovincial trade barriers and diversify trade partners. “If tariffs are rescinded, then Canada is in a better place moving forward,” he said. “In the interim, Canada is going to be forced into a lot of positive changes.”

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