The North American architectural glass industry is feeling the effects of a new wave of trade escalations between the United States and Canada that creates uncertainties for suppliers and may force them to revise their strategies of development.
Recently the government of Canada announced it imposed a new round of counter-tariffs on U.S. goods effective Sept. 8, in response to the U.S. Section 338 tariffs imposed in July. Several tariff items were directly relevant to the Canadian fenestration industry and were included in the government’s list:
50% tariff imposed:
- 7610.10.00 – Aluminum doors, windows and their frames and thresholds for doors:
- 7308.30.00 – Iron or steel doors, windows and their frames and thresholds for doors:
- 7318 – Iron and steel fasteners: including screws, bolts, nuts, washers, rivets and other commonly used fastening products;
25% tariff imposed:
- 8302.42.00 & 8302.49.00 – Base mounting and fittings for doors and windows
Canadian building sector reevalutes supply chains
Adrian Edge, director of codes and regulatory affairs for Fenestration Canada, says that the new trade escalations will continue to negatively affect the existing trade relationship between Canada and the United States. In the case of Canada, more and more local companies are switching to alternative sources of supplies.
“I think the consequences for the float glass sector are tied not only to specific tariffs or trade measures, but more fundamentally to the changing trade relationship between Canada and the United States,” he says. “What I am seeing is an increased willingness among Canadian companies to reevaluate alternative sources of supply. Options that, under more stable circumstances, might previously have seemed unnecessary or commercially unreasonable.”
Edge believes that tariffs will have a negative impact on U.S. business, as U.S. float glass producers have traditionally benefited from significant advantages in serving the Canadian market, including proximity, established supply relationships, shorter transportation routes, and the high degree of integration between the two economies.
According to Edge, increasing trade uncertainty gives Canadian companies a legitimate business reason to look beyond those advantages and begin assessing suppliers in Europe, Asia, or elsewhere.
But that doesn’t mean establishing new supply lines will be easy. Market analysts expect such re-orientation will be associated with serious difficulties for Canadian business, as the Canadian industry would have to determine how to diversify its supply at precisely the moment it needed those alternatives.
Trade tensions lead to higher costs, bigger impacts for smaller businesses
Nikhil Kaitwade, a principal consultant of the international research agency Future Market Insights, believes the ongoing trade escalation between the United States and Canada has a negative impact on the float glass sector of both countries and the entire North American market.
“We believe the imposition of U.S. tariffs on Canadian glass products, followed by Canadian counter-tariffs, could negatively affect the wider North American float glass sector,” he says. “Tariffs increase landed costs and disrupt established cross-border relationships among manufacturers, processors, fabricators and distributors. These additional costs will ultimately be reflected in prices paid by construction companies, glazing contractors, automakers and consumers.”
He believes smaller processors and distributors in both countries are likely to face the greatest pressure, as they have less capacity to absorb higher procurement and logistics costs. At the same time, larger manufacturers may be better positioned to adjust sourcing, production and pricing, but they will still face uncertainty and potential demand delays, he adds.
According to market analysts, the new supply lines may include domestic Canadian producers, who could benefit from reduced import competition. However, while this may benefit some parts of the supply chain, Canada still does not manufacture float glass, and float glass furnaces cannot be switched on overnight.
Expanding float glass production requires significant capital investment, dependable energy infrastructure and long commissioning periods. Tariffs can therefore disrupt supply much faster than domestic capacity can replace it.
In the meantime, representatives of the architectural glass industry in both the United States and Canada have serious concerns about future prospects of the market in both countries.
Raymond Shelton, vice president and chief sustainability and communications officer at YKK AP America says that the existing uncertainty in the market is due to this new round of tariffs.
“The current trade environment is creating uncertainty and additional cost pressure across North American manufacturing and construction, and the glass and building-products sectors are not immune,” Shelton says. “The ultimate impact will depend on how trade policies and material costs evolve, and how companies across the supply chain adapt.”
YKK AP America’s domestic U.S. manufacturing footprint and vertical integration help mitigate some of these pressures, Shelton adds.
“Our Dublin, Georgia, operation includes in-house billet casting, extrusion, and finishing, giving us greater control over an important part of our aluminum supply chain,” Shelton says. “We have also increased the use of secondary aluminum in our billet production to more than 50%, helping reduce our exposure to volatility in primary aluminum while supporting our sustainability objectives.” Shelton hopes that market players will be able to adapt to the current trade realities, that will allow them to stay afloat.
Still, Shelton is seeing the effects of higher costs, including more value engineering, alternative system evaluations, and project re-quotes.
Derek Losee, sales manager from sedak Inc., a German-based glass fabricator, expects the current trade war to give European suppliers a chance to find their own niche in the North American market.
North American integrated supply chain could change
“The current trade tensions could create uncertainty in the North American glass market, particularly through higher costs and shifting supply chains,” Losee says. “For sedak, the direct impact is limited, as we produce in Germany and are located close to major float glass production. This gives us short supply routes and a strong, reliable sourcing base. However, with the tit-for-tat attitude between the United States and Canada, we believe that Canadian glass fabricators and glaziers will look to Europe to replace much of the supply coming from the U.S. This will certainly put additional pressure on European producers and prices. It will be a welcome change when these tensions subside and the world can count on a more stabilized trade zone.”
Alongside the tariff announcement, the government of Canada announced a new and expanded $7.5-billion support package for Canadian businesses and workers affected by U.S. tariffs. Ottawa has also expanded programs intended to help Canadian businesses, including those from the glass industry sector, to respond to tariff-related disruption.
Analysts expect much will depend on the ability of both the United States and Canada to reach a possible compromise. As analysts and suppliers have said, if the trade dispute continues, manufacturers may increasingly localize production and processing or redirect trade through alternative markets. This could weaken the efficiency of what has historically been an integrated North American supply chain.
