In the Air - HRAI Industry News

From recent HRAI Conference panel discussion 

A refrigeration manufacturer lost a US $1.6 million order even though the equipment faced no tariff at the time. The American customer feared that a tariff might arrive before the shipment did.

That example, shared by RefPlus president and CEO Mathieu Cardinal, gave HRAI’s closing keynote on September 22 its sharpest illustration of what changing trade rules mean for Canada’s HVACR industry.

The session, Tariffs Trade, & Tomorrow, (sponsored by Mitsubishi Electric Sales Canada) brought Cardinal together with Alex Greco, senior director of manufacturing and value chains at the Canadian Chamber of Commerce, and William Pellerin, co-leader of McMillan LLP’s international trade group. Huw Williams, president of Impact Public Affairs, moderated. 

“Volatility remains the ongoing certainty for Canadian business,” Greco told delegates at HRAI’s Annual Conference + AGM in Gatineau. Tariff pressure, he said, can travel through metals and components, equipment manufacturers, wholesalers and contractors before reaching homes and businesses. Its effects include brokerage fees, higher supplier prices, inventory costs and risks under existing contracts.

Greco urged companies to establish precisely where they are exposed. That means checking product classifications and suppliers, reviewing contracts and quotations, and testing what further cost increases would do to margins. “The path forward is for businesses like yours to control what you can control,” he said.

Cardinal described how difficult that has become for a Canadian manufacturer selling across the border. RefPlus makes refrigeration equipment in Quebec using substantial amounts of steel, aluminum and copper. As tariffs and counter-tariffs have changed, the company has altered sourcing, sought routes that avoid added costs and hired a customs and logistics specialist to handle compliance and recover duties charged in error.

“We didn’t have a choice,” Cardinal said of the added position.

The greater threat to some sales is uncertainty about what will happen between an order and its delivery. RefPlus equipment can take three months to reach a customer. Cardinal said one large U.S. buyer cancelled a US$1.6 million order because it feared a tariff could be imposed during that interval, then sourced the products locally.

“We’ve had order cancellations,” he said, despite limited current tariff exposure on much of what RefPlus ships to the United States.

RefPlus has responded by explaining product-specific rules to customers and, where possible, adapting custom designs to reduce exposure. It is also seeking sales beyond its traditional North American markets. Business in Central and South America remains small, Cardinal said, “but it’s looking promising.”

Moderator, Huw Williams connected those company-level decisions to HRAI’s advocacy. He said the association moved early to seek tariff remissions for the sector and would continue pressing its case in Canada and the United States. When governments are struggling to reach an understanding, he told delegates, industry associations have a role in making the consequences clear.

Greco called for faster, clearer remission decisions and government support that businesses can actually access. He said uncertain eligibility and reluctance to take on debt can keep available programs from reaching companies under pressure.

The speakers’ accounts returned repeatedly to predictability. Cardinal’s cancelled order showed that a tariff need not be in force to cost a manufacturer a sale. For Greco, the immediate response was to know each product’s exposure and prepare alternatives. Williams closed the available transcript with a reminder of the agreement already at stake: “We’re not looking for a deal. We have a deal in Canada.”

Attorney, William Pellerin’s thoughts brought the issue to the customs declaration and the purchase order. He warned against changing a product’s tariff code simply to escape duties, routing it through another country without genuinely changing its origin, or understating its value at the border. For HVACR companies, the legitimate work is more exacting: verify classifications, examine available remissions and document where goods originate.

His presentation also raised a question that can outlast the tariff itself: who ultimately pays? The importer pays at the border, but a contract can pass that cost to a manufacturer, wholesaler or contractor. Pellerin urged businesses to settle responsibility for duties and any future refunds before agreeing to those terms.

The speakers approached the trade dispute from different positions, but their message converged: uncertainty itself is costing the HVACR industry money. Greco traced the pressure through the supply chain. Cardinal showed how the prospect of a tariff could cancel an order before any duty was charged. Pellerin showed why businesses must know their exposure, check their classifications and settle who bears tariff costs under their contracts.

Williams said HRAI had moved early to seek tariff relief for the sector and would continue making its case on both sides of the border. “When the governments aren’t talking to each other, that’s where your association value really comes into it,” he told delegates.

For HRAI, that work means keeping the consequences for manufacturers, distributors and contractors in front of policy makers, while giving members clear information as the rules change.