President Trump adds trade pressure, announces 25% tariffs on all steel and aluminum imports
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UPDATE – February 9: President Trump plans to introduce new 25% tariffs on all steel and aluminum imports into the U.S. on top of existing metals duties.
The president shared the news with reporters on Air Force One on his way to the NFL Super Bowl on Sunday, February 9, saying that he will announce the new metals tariffs on Monday, February 10. This would be the second tariff increase on steel and aluminum in six months; in September 2024, the Biden administration raised tariffs on steel and aluminum products from China, including heat exchangers.
The largest sources of U.S. steel imports are Canada, Brazil, and Mexico, followed by South Korea and Vietnam. Because many HVACR systems and parts rely on raw materials such as steel and aluminum, costs of raw materials are likely to increase; the supply chain may also see an increase in issues. Major HVACR manufacturers including Carrier, Daikin, Lennox, and Trane have manufacturing facilities in Mexico while also receiving components from China. Some overseas HVACR companies manufacture products exclusively in China.
Additionally, the president said he plans to announce reciprocal tariffs on other goods that will take effect almost immediately. The reciprocal tariffs would be applied to all countries and would match existing tariff rates levied by each country.
In related tariff news, President Trump said Canada’s and Mexico’s actions to secure their U.S. borders against drugs and immigration are insufficient ahead of a March 1 tariff deadline. The president had initially planned to implement 25% tariffs on Canada and Mexico on February 1 but had paused the tariffs.
While ACCA appreciates the efforts to prioritize products that are manufactured on American soil, these new tariffs will undoubtedly create additional cost and supply chain issues for contractors.
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UPDATE – February 4: China has announced 15% retaliatory tariffs on coal and liquefied gas in response to the Trump administration’s tariffs, which took effect at midnight on February 4. Crude oil, pickup trucks, and agricultural machinery will also face 10% tariffs, set to take effect on Monday, February 10. As of now, President Trump has not responded.
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ORIGINAL ARTICLE- February 3: In a flurry of activity, President Trump’s proposed 25% tariffs against imports from Mexico and Canada were both paused on Monday, February 3. A 10% tariff on Chinese goods will still go into effect on Tuesday, February 4.
The Trump administration had threatened tariffs against Canada and Mexico in demand for greater enforcement at the borders regarding fentanyl and drug trafficking.
In response, Canadian Prime Minister Justin Trudeau announced a 25% retaliatory tariff on U.S. goods entering Canada. The Heating, Refrigeration, and Air Conditioning Institute of Canada (HRAI) had advocated for the Canadian government to negotiate to avert tariffs or to exempt products from the HVACR sector due to their essential nature. According to a list released by the Canadian government on February 2, the list of U.S. goods that would have been impacted by the Canadian tariff would not have included HVACR products; it is expected that a broader range of goods might be included in the next round of tariffs should tariffs be reinstated. In the afternoon of February 3, Canada announced a tariff pause accompanied by a border reinforcement plan after speaking with President Trump.
Earlier in the day on February 3, Mexico had responded to the Trump administration’s threat of tariffs, mobilizing the country’s National Guard to station 10,000 solders on the U.S.-Mexico border to protect against drug trafficking.
What does all of this mean? Tariffs on both Canada and Mexico, as well as tariffs on incoming U.S. goods into Canada, have been paused for 30 days; they may be reinstated and may still impact HVACR goods.
The 10% duty on Chinese imports still stands, with China’s ambassador to the United Nations indicating that China will file a lawsuit with the World Trade Organization against President Trump’s tariff. Additional retaliatory tariffs or measures from China are expected.
How do tariffs impact HVACR contractors?
A tariff is essentially a type of tax on imported goods when they are brought into a country from abroad.
Tariffs directly affect the price of imported goods, leading to higher prices throughout the supply chain.
The HVACR industry relies heavily on a global supply chain, sourcing components and materials from various countries, including Mexico and Canada. Tariffs could have several implications:
- Increased equipment costs: Many HVACR systems and components are imported from Mexico and Canada. Tariffs may lead to higher costs for manufacturers as they import equipment and parts, costs which may be passed down to contractors.
- Supply chain adjustments: Contractors might need to seek alternative suppliers or renegotiate terms with existing ones to mitigate the impact of increased costs. This could lead to delays and require adjustments in project timelines.
- Operational changes: In the face of rising costs, contractors will need to either absorb increased costs of goods and work toward cutting costs in other areas of their businesses or pass the cost on to customers.
ACCA’s commitment
The Air Conditioning Contractors of America (ACCA) is dedicated to supporting its members through these challenging times. We are closely monitoring the situation and will provide updates and resources to help contractors navigate the evolving trade and regulatory landscape. Our mission is to equip HVACR contractors and their teams to meet pressing challenges and opportunities, and we will continue to advocate on behalf of the industry to mitigate the impact of these tariffs.
ACCA works hard to advocate behind the scenes on behalf of contractors; but we can’t do it alone. ACCA membership dues power our advocacy efforts and enable us to advance contractor interests so that contractors can keep their focus on doing what they do best: running successful, impactful businesses.
Thanks to our members for supporting this vital work.
Not a member? Learn more here.
Posted In: Government, Supply Chain, Taxes
