Gas Furnace Exemptions to Tariffs
HRAI has been working to support members during what has become a tumultuous period of Canada-US trade relations. While there has been a significant amount of activity this week in Canada-US trade relations, we wish to highlight some steps that HRAI has taken to represent one sector of the industry's request for relief from Canadian tariffs.
Note: information regarding Canada’s response to international tariffs announced by the United States on April 2 was not available at time of publication, but HRAI will be following this information and updating members in real-time, through webinars, updates on the HRAI website, and the In The Air newsletter.
HRAI has advised members through various communiques and webinars of the government’s process for submitting comments on the application of retaliatory tariffs under the proposed “second round” affecting $125 billion of imports into Canada. The draft list for this second round included many of the products of this sector that had been exempted in the first round.
Over the past several weeks, HRAI was approached by member companies active in gas furnace manufacturing who argued that their product is produced mainly in the United States, and while there are some Canadian producers, there is not a sufficient availability of alternatives to US product available to the Canadian buying public (an important criterion for exclusion), which would mean a significant cost burden to end users and a potentially significant dampener on sales for the industry. They argued the industry would be better served by an exemption for gas furnaces from tariffs.
HRAI staff initially consulted on this request with producers in this category, as well as the Manufacturers Board and then requested authorization from the HRAI Board of Directors to file a request to exempt gas furnaces from Canadian tariffs.
If you feel that your products will meet the criteria for remission (relief) on already-announced tariffs (see below), please contact HRAI staff, or write to tariffs@hrai.ca. HRAI will collect information and will consult with HRAI member producers. While remission requests should be filed individually, following the process announced, Finance Canada is open to hearing from associations on behalf of a group of members for specific product categories. HRAI will also continue to assist and guide members regarding the process for seeking exemptions, should this opportunity extend beyond the April 2nd deadline.
Background
On January 31, HRAI urged the government to do its utmost to avoid tariffs between Canada and the United States, and if tariffs were placed on Canadian goods, to seek an exemption for the HVACR industry. This exemption would be based on our industry's essential role in keeping Canadians comfortable and healthy in indoor environments.
This position was informed by surveys of HRAI members, discussions with groups and individual members, and consultation with HRAI's governance structure.
On March 4th, in response to the US Trump administration's announced tariffs on Canadian products imported into the United States, Canada provided the first part of its response - a list of $30 B in US imported goods that would be subject to a 25% tariff. That first list (click here), as requested by HRAI, excluded many HVACR industry products.
Later that month, the government provided notice for the second part of its response, another $125 B in retaliatory tariffs, effective April 2nd, in response to US tariffs expected for all imported Canadian products. This list of products is available online (click here).
On March 12th, the government announced additional, separate, retaliatory tariffs responding to US tariffs on Canadian steel-and-aluminum products. This list of products is available through this link (click here). Several HVACR products were included on this list.
Throughout this period, HRAI has been communicating regularly with members, through our In The Air Newsletter, the HRAI website, and webinars.
With these announced tariffs, the government announced two important processes:
- Remission - a process allowing Canadians to alert the government of economic hardship in situations where products are not available domestically or from non-US sources. Under specific circumstances, remission allows for relief from the payment of tariffs, or the refund of tariffs already paid.
- Comment period - an online process for industry and members of the public to inform the government of the impact of tariffs on their industry or the community, and to advocate for exemptions from tariffs.
HRAI's membership includes the entire HVACR supply chain, and the impact on each part of our membership will be severe for all, but somewhat different. Our work has been guided by our mandate to represent the entire HVACR industry in Canada.
We appreciate the strong engagement we have received from members, and invite your comments and suggestions for action that HRAI can be taking to support the industry and our members.
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