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The B.C. government, prodded by its construction industry, has raised the alarm in Ottawa about what it says are the unintended consequences of the rebar tariff. The province fears that the rising costs could drive away investment just as a series of major projects, particularly around liquefied natural gas, are approaching final investment decisions. (NORM BETTS/BLOOMBERG NEWS)
The B.C. government, prodded by its construction industry, has raised the alarm in Ottawa about what it says are the unintended consequences of the rebar tariff. The province fears that the rising costs could drive away investment just as a series of major projects, particularly around liquefied natural gas, are approaching final investment decisions. (NORM BETTS/BLOOMBERG NEWS)

B.C. new home buyers feel weight of heavy rebar tariff Add to ...

The cost of a trade dispute between steel producers in Central Canada and their offshore competitors is being felt by new home buyers in Metro Vancouver’s already super-heated condominium market.

Neil Chrystal, president and CEO of Polygon Homes, only learned about the international scrap over alleged dumping of reinforcing steel rods – known as rebar – when he saw a significant spike in construction material costs about two months ago. He discovered that an interim duty has been applied to Canadian imports of steel rebar from China, South Korea and Turkey. U.S. rebar imports are not targeted in this trade dispute.

The result is that each of Polygon’s newest two-bedroom condo units selling now in Burnaby and Richmond cost at least $5,000 more. Those kinds of cost increases are being felt across the province’s construction industry.

“I think buyers are already stretching to get into their first home and when you add a cost like this, it’s one more roadblock in the way of home ownership,” Mr. Chrystal said in an interview Monday. “This is one more needless tax on first-time home buyers.”

And, if a trade tribunal in Ottawa rules in favour of the country’s steel producers – primarily in Ontario and Quebec – the cost of construction will jump even higher in B.C. early next year. The industry says those three countries are dumping their product in Canada at a discount. The B.C. government is applying for an exemption, saying it will be the hardest hit by the duty because it relies almost entirely on imports from the U.S. and Asia.

B.C. Premier Christy Clark raised the matter on Monday in a meeting with Ontario Premier Kathleen Wynne. Ontario government sources said the two did not reach any accord, and the Canadian International Trade Tribunal hearing is set to convene on Dec. 15.

In an editorial board meeting earlier in the day with The Globe and Mail, Ms. Clark said the rebar duty is one of the top trade irritants between the two provinces right now.

“I understand Ontario has some issues, but we cannot allow them to affect British Columbia, because Ontario cannot supply British Columbia. So raising the price in Ontario for Canada is only going to mean that we buy more expensive rebar from the United States,” she said Monday.

“It poses a real economic threat in British Columbia,” Ms. Clark added. “On the one hand, there’s no benefit for Ontario. On the other, I would argue it creates a problem for Ontario and all of the rest of Canada that depends on a successful British Columbia economy to contribute to Confederation.”

The B.C. government, prodded by its construction industry, has raised the alarm in Ottawa about what it says are the unintended consequences of the rebar tariff. The province fears that the rising costs could drive away investment just as a series of major projects, particularly around liquefied natural gas, are approaching final investment decisions.

Those fears are already being realized in the residential construction sector. Polygon is now selling two-bedroom condo homes in Burnaby starting at $460,000 – units that were built after the cost of rebar imports jumped due to the interim duty. The Independent Contractors and Business Association of B.C. (ICBA) estimates that if the full duty sought by Canadian steel producers is imposed – a decision is expected in January – the cost of a two-bedroom condo unit could rise by $10,000.

That is especially bad news for new home buyers in Vancouver, where housing prices are headed for a record high this year in what is already considered Canada’s most expensive property market.

“It feels like Western Canada – B.C., anyway – is getting screwed by Central Canada,” said Philip Hochstein, president of the ICBA.

Reinforcing steel is a major component in concrete construction, but B.C. has no rebar production. The ICBA estimates that 60 per cent of the rebar used in B.C. comes from the U.S., where prices are still significantly cheaper than Canadian rebar due to high transportation costs.

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