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September 16, 2016

Steep Drywall Tariffs Pushing Up Costs on New Homes and Renovations

Tariffs ranging from 105% to 276% have been imposed on drywall originating from the United States.  Canadian Border Services Agency (CBSA) has made a preliminary determination of dumping into Canada effective September 6, for drywall imported into Western Canada (http://www.cbsa-asfc.gc.ca/sima-lmsi/i-e/gb2016/gb2016-np-eng.html).

The tariff was the result of a complaint about American competitors offering cheap product that came from CertainTeed, whose Western Canada's only supplier.

 “Given that the tariff was effective immediately on CGC drywall, CertainTeed announced a price increase effective Sept 8th of 12%.  We’re being told that they will be announcing another increase here this month of somewhere in the range of 12%-25%“says Ryan Kurzac of Kamloops Home Hardware and Director of the CHBA Central Interior.

This is all due to CertainTeed drywall not being applicable to the tariff as they have a manufacturing facility in Canada.  With these increases, they are closing the price gap between imported drywall vs drywall manufactured in Canada.

The Canadian Home Builders Association (CHBA) is very concerned about the immediate effect this will have on Western Canada as the duty applies to drywall destined for use in British Columbia, Alberta, Saskatchewan, and Manitoba, as well as the Yukon and Northwest Territories. CHBA at the national level has already received evidence that this unannounced price increase is having ripple effects on price and supply all across Canada affecting renovations and new home construction costs that ultimately hit consumers in the pocket book.

CHBA became aware of this issue a few weeks ago, and after speaking with HBAs, members and drywall suppliers, submitted its concerns to CBSA to inform the first stage of its investigation. CHBA’s concern focused on the impact that an immediate application of a large duty on drywall would have on builders and home buyers supply and price in Western Canada.

With the decision rendered by CBSA on September 6 to impose exorbitant duties on U.S. drywall, CHBA has engaged with trade experts and legal counsel to explore additional options to address the issue. As a first step, CHBA has submitted to participate in the Canadian International Trade Tribunal's (CITT) inquiry as to the extent of injury to the domestic market, where it hopes to see the duties reduced or eliminated.

The nature of the CITT’s anti-dumping investigation looks only at the industry in question—in this case the drywall industry—hence damages to the residential construction industry, as users of the product, do not get due consideration at this stage.  Such consideration can only be given very late in the process.  However, given the serious nature of the potential damage to our members, CHBA, in consultation with members and provincial HBAs, is pursuing several courses of action to address the matter.

“If the CITT upholds the duties through the next stage of the process, CHBA believes it has a very strong case for an appeal based on the public interest for housing affordability, the vulnerability of housing markets in Western Canada and the impact this duty has on drywall supply and price throughout Canada.  Further, although that process is typically begun after the CITT determination, CHBA is engaging politically to raise awareness of this issue and potentially accelerate action.” Says Rob Lemire, CHBA Central Interior President.

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For more information contact
CHBA Central Interior Office
T:  250 828 1844
W: www.chbaci.ca