Canadian counter-tariffs could have massive effect on Canadian fenestration

In response to recent tariffs deployed by the U.S. against Canada and Mexico, and retaliatory counter-tariffs Canada announced, Fenestration Canada presented a webinar, “Tech Talks: U.S. Border Trade and Tariffs,” hosted by Adrian Edge, director of codes and regulatory affairs for the Canada-based association.

The presentation and discussion centered on clarifying the nature of tariffs for both the U.S. and Canada, and providing next steps for companies to be in compliance. Here are a few takeaways.

Canadian counter-tariffs could have major impact on Canadian fenestration

The new tariff environment for the U.S. and Canada dates back to November of 2024 when President-elect Donald Trump posted on social media that he would deploy 25% tariffs on Canadian and Mexican goods. He stated at the time that the reason for the tariffs was due to fentanyl being brought across both borders.

Since then, there have been back-and-forth efforts and announcements by both governments regarding tariffs and counter-tariffs, with counter-tariffs by Canada being declared in two phases.

As of this writing, the U.S. has enacted 25% steel and aluminum tariffs with Canada, with a pause announced for goods covered by the USMCA that will last until April 5. Canada has responded with tariffs in the same amount for these materials, which went into effect March 13.

Edge said that some of the most important dates in the tariff exchange are coming up: the second phase of counter-tariffs by Canada, slated to go into effect March 25, would include the following goods (please see the video for the complete list):

• Float glass
• Safety glass
• Laminated glass
• Insulating glass units
• Hung door hinges
• PVC

Edge underlined the potential impact on the Canadian fenestration industry if flat glass remains on this list, given that Canada does not currently manufacture raw glass, and buys almost 90% of its flat glass from the U.S. “This is arguably one of the most dangerous situations to our industry,” Edge said.

In this instance, the Canadian counter-tariffs would be more damaging to the Canadian fenestration industry, he says. “Tariffs threatened by the United States have the capability of shrinking our market, but only an action like [these counter-tariffs] from our own [Canadian] government has the ability to completely cripple our industry,” Edge explained.

What is a tariff and who pays the duty?

U.S. tariffs on Canadian goods. Costs are added to goods that Canada sells to the U.S. or that U.S. customers buy from Canada. Eventually, the duties paid go to the U.S. Government.

Canadian counter-tariffs. When counter-tariffs are placed by the Canadian government on U.S. goods, the products that the U.S. sells to Canada, or that Canadians buy from the U.S., gets that duty tax which goes back to the Canadian government.

Edge also spent time clarifying who pays the tariff at the border. Part of this depends on an understanding of Incoterms, which are widely used terms of sale, organized into 11 internationally recognized rules that define the responsibilities of sellers and buyers.

“Depending on which Incoterm you or your customer had determined in your contract agreement will determine who owns the tax liability, and so who owns the duty responsibility and delivery responsibility,” Edge said.

Ways to comply and suggestions to decrease liability

Edge talked through several ways to ensure Canadian companies are in compliance with current tariffs. Here are a few of his suggestions for contract language. Watch the video for more in-depth insights.

Clarify your Incoterms. If you don’t already explicitly define what term is used for your product, it’s time to change that, Edge says.

Make duty payment explicit in contracts. Make it clear in contracts who owns the duty. If you don’t, you run the risk of paying the bill.

Break up shipments. Breaking up shipments, for example, shipping glass, hardware and frames from the Canada to the U.S. and declaring the individual parts instead of the finished product, is one method to explore in managing the effect of tariffs for Canadian companies.