How Canada’s retaliatory tariffs could drive up your winter heating costs

WASHINGTON, D.C. — In the past week, the trade war saw new U.S. import restrictions on $1 billion in Canadian goods, fresh pain for Canadian steel workers, and more fiery rhetoric from the White House.

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Last Monday, hundreds of Stelco workers in Ontario learned of looming layoffs and a plan to halt operations at the Hamilton Works plant. Meanwhile, President Donald Trump announced a massive, $15 billion mega-steel plant project for Iowa, touting hundreds of new jobs for the region.

“These are your 232 tariffs, the steel tariffs, at work,” U.S. Commerce Secretary Howard Lutnick said during that announcement, referring to the Section 232 tariffs Washington has imposed to support U.S. steel. “Without those tariffs, this mine doesn’t get built, and this steel plant doesn’t get built.”

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Prime Minister Mark Carney laughed off U.S. President Donald Trump’s comment that Canada would say “sorry” for its retaliatory tariffs, but as trade tensions heat up, industry leaders are finding the tariffs anything but funny. That’s especially true in the heating, ventilation, air conditioning, and refrigeration (HVACR) field, where costs are rising just in time for the colder months.

This has led to an unusual cross-border response by the HVACR industry, with Canadian and U.S. groups that represent contractors, distributors, and manufacturers working together to push Ottawa and Washington to preserve the tariff-free trade arrangement under the Canada-U.S.-Mexico Agreement (CUSMA). They warn that duties on equipment and components are driving up costs, disrupting tightly integrated supply chains, and even pushing buyers to look for offshore suppliers.

“In a few weeks, it’s going to get cold, and people are going to need to turn on their furnaces. Those furnaces that are old and need to be replaced are being tariffed,” said Victor Hyman, executive director of ClimateCare Canada, an HVAC contractor cooperative in Ontario.

“For the homeowner that needs to replace their furnace or heat pump or air conditioner this year, they’re going to pay a lot more than they would have pre-trade war,” he added, noting that a job that would’ve cost $5,000 two years ago is now $5,700 or $5,800.

Because the Canadian and U.S. HVACR markets are so integrated, with some parts and appliances crossing the border multiple times during production, industry leaders in both countries are asking Washington and Ottawa to “prioritize a return to free, fair, and predictable trade,” according to the Heating, Refrigeration and Air Conditioning Institute (HRAI) of Canada.

HRAI recently announced that it was “joining its American counterparts in calling for the preservation of the benefits of the Canada-United States-Mexico Agreement (CUSMA/USMCA),” according to a press release.

Its U.S. counterpart, Heating, Air-conditioning, and Refrigeration Distributors International (HARDI), alongside the Air Conditioning Contractors of America, the Air-Conditioning, Heating, and Refrigeration Institute, and the Plumbing-Heating-Cooling Contractors Association, wrote a similar message to U.S. Trade Representative Jamieson Greer in early September. They wrote to “express our strong support for the United States-Mexico-Canada Agreement (USMCA) and urge the Office of the United States Trade Representative to protect the agreement’s benefits to the heating, ventilation, air conditioning, refrigeration, and water heating (HVACR) industry.”

Martin Luymes, VP of government and stakeholder relations at HRAI, which represents roughly 1,200 member companies nationwide, says the industry’s concerns are more urgent now that the tariff exposure has expanded. In 2025, in response to the 232 tariffs, Canada responded with a retaliatory set of tariffs that impacted U.S.-origin gas furnaces coming north. This led Canada’s industry to campaign for tariff relief, which was granted in June, Luymes explained.

But now, following the introduction of Washington’s Section 338 tariffs on hundreds of Canadian imports this August, Ottawa has imposed new retaliatory tariffs that are raising the prices on HVACR equipment and components being shipped into Canada — and now the impact is close to universal.

“Air conditioning products, heat pumps, and a variety of others are included, including refrigeration components, parts … and are all within scope of different levels of tariffs, anywhere from 15 to 25 to 50 per cent,” Luymes explained.

Tariffs increasing the cost of products that are very necessary — whether it is heating in winter, air conditioning in summer … have a dramatic impact on people’s lives

Because Canada imports more HVACR equipment from the U.S. than it exports, Luymes said Ottawa’s retaliatory tariffs are hitting Canada’s side harder than the original U.S. tariffs.

“The impacts on the Canadian economy, in our sector at least, are greater — are more driven by the Canadian response than by the original U.S. tariffs,” he said.

That’s why Hyman and others want the retaliatory tariffs, at least on HVACR products, lifted.

“As much as we would like to stand up to U.S. trade aggression, we shouldn’t do it despite ourselves,” Hyman said.

Without a policy change, he anticipates sticker shock for customers this winter. “If your furnace dies this winter, you need to replace it this winter. You can’t wait a couple of years to replace it,” he said.

In the U.S., Alex Ayers, HARDI’s VP of government affairs, also sees the tariffs and price increases as unfair to consumers, especially given that heating and cooling are essential goods.

“Tariffs increasing the cost of products that are very necessary — whether it is heating in winter, air conditioning in summer … and then very specifically refrigeration … have a dramatic impact on people’s lives,” he said.

A return to CUSMA free trade, meanwhile, would restore much-needed certainty the industry has been lacking, he said.

“We as an industry view USMCA as successful. We want to continue to see it be successful,” Ayers said.

The goal of Trump’s tariffs was to foster more domestic manufacturing, but they have not succeeded in expanding U.S. domestic HVAC production, and the supply chain issues and higher costs have simply added more uncertainty.

Ayers noted that the fluctuating tariffs are wreaking havoc on operations.

“A product being manufactured anywhere in the world can take weeks to get to its final destination for a contractor to install it. So, when tariffs are constantly changing, it’s hard to say what the price of that product is going to be,” Ayers said.

Tariff uncertainty and the higher costs for parts, plus the administrative costs companies have had to absorb to ensure they’re keeping up with the duties, are also beginning to change business behaviour, with some suppliers looking elsewhere for products so they can avoid the red tape and higher prices.

Luymes and Hyman said this has HVACR suppliers already starting to turn toward offshore suppliers for heat production and supplies of other components.

Luymes said he knows of a member company, a large contractor who buys tens of thousands of units each year, that has already shifted suppliers. The owner, he said, told him, “‘I’m not buying anything from the United States any more.’” That owner has since started sourcing his supplies from China instead, he said.

Businesses are looking for supply relationships that they can count on for years. “They don’t want to commit to a supplier and then suddenly have a 25 per cent increase,” Luymes added.

Luymes, Hyman and Ayers believe these decisions to pivot to Asian suppliers will increasingly be made throughout the industry the longer the tariff war continues.

“With products being produced within North America being tariffed on either side of the border,” said Luymes, “it does suggest that there will be a shift in purchasing away from Canadian or American producers and to Asian producers who are not subject to those tariffs.”

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