A 50% tariff can’t break parts of the U.S. dependence on Canadian cement

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Photo by Jean Levac/PostmediaMark Thompson’s concrete business in northern New York has almost exclusively relied on cement from Canada for nearly half a century.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountJefferson Concrete Corp., located in Watertown, about 30 kilometres from the Canadian border at the eastern end of Lake Ontario, uses roughly 4,000 tonnes of cement a year to manufacture everything from septic tanks and sewer infrastructure to bridge beams. Most of that cement comes from Ontario, with a smaller amount of specialty material imported from Montreal.Now, those imports face a 50 per cent United States tariff as cement is among a broad range of Canadian products covering about US$20 billion in annual trade hit by the new duties.SUBSCRIBER EXCLUSIVE: FP West: Energy Insider brings you behind the oilpatch’s closed doors with exclusive insights from insiders every Wednesday morning.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of FP West: Energy Insider will soon be in your inbox.We encountered an issue signing you up. Please try againThe new tariffs pose a potentially costly problem for Thompson and others in parts of the U.S. that are heavily dependent on Canadian cement and don’t have enough nearby domestic production to easily replace it.The vice-president and co-owner of Jefferson Concrete expects he’ll have to eat much of the additional cost since about a third of his company’s next year’s work has already been quoted, including municipal sewer and bridge projects priced before the tariff took effect.“I can’t pass this cost on,” he said. “I’ve got to absorb it.”But despite the size of the tariff, Thompson isn’t planning to switch to U.S. cement.He looked at buying from a producer in Pennsylvania, the closest practical domestic alternative he found, but shipping cement is expensive, especially over hundreds of kilometres. After doing the math, he realized the costs of tariffed Canadian cement and cement shipped from Pennsylvania are essentially the same.“We’re going to continue to get it right from Bath, Ontario,” he said, referring to the Amrize Ltd. cement plant that supplies most of his business.Other companies may end up doing something similar since Canada exported about 3.9 million tonnes of Portland cement to the U.S. in 2023, worth roughly US$437 million, according to United Nations trade data.A fifth of the cement consumed in the U.S. last year was imported, according to the National Precast Concrete Association, with Canada supplying roughly five per cent of those imports.But those figures mask a much greater dependence on Canadian cement closer to the border, said Nick Rhoad, chief executive of the association, which represents nearly 700 companies involved in manufacturing and supplying precast concrete products.“There is not enough capacity in the Northeast United States to replenish the need,” he said.Rhoad said Canadian cement is particularly important to four regions of the U.S. since it accounts for almost half of the cement used in New York and New England and 42 per cent in Montana and North Dakota. It also fills about 20 per cent of the needs in the Pacific Northwest and 18 per cent in the eastern Great Lakes.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.Replacing that supply won’t happen quickly. He said developing enough new domestic production would require significant investment and years of permitting and construction.As a result, he said the tariff is already causing concern among members that rely on Canadian cement, particularly those with projects priced before the new duty took effect.Furthermore, the effect of the tariffs isn’t just about cement, he said, because higher material costs could ripple through construction, raising costs or delaying housing, infrastructure and energy projects and, ultimately, affecting construction jobs.Rhoad said the industry has been raising its concerns about the tariff with Congress and the office of the U.S. Trade Representative.But cost isn’t the only reason Thompson prefers Canadian cement. He has been using it for decades and knows how it performs in the company’s concrete mixes.“We’ve been in the comfort zone for many, many years with these people,” he said. “I’m an old farm kid, so when the old cow is milking good, I try not to mess with it.”Thompson also worries his company and others could be put at a disadvantage against competitors farther south that already use U.S. cement and aren’t exposed to the same additional cost.Cement is Jefferson Concrete’s largest day-to-day production expense, he said, so absorbing a significant increase in costs will eat into the profitability of a company that employs 54 people.“I’ve got 54 employees, so I’ve got 54 families that I’m responsible for,” he said.The tariff comes after several years of sharply rising construction material costs and could be particularly significant in New York, where Canada is a major supplier of cement, Mike Elmendorf, chief executive of the Associated General Contractors of New York State, said.He said contractors also face the problem of not knowing what tariffs will be in place months from now, when projects being priced today will be under construction.A contractor that builds a 50 per cent tariff into a bid could lose the job to a lower bidder if the tariff disappears, Elmendorf said, but a company that doesn’t account for it could be stuck with the expense if it remains.One large New York City contractor recently asked Elmendorf how it was supposed to bid in such an environment.“Short of consulting an astrologer or a psychic, there’s not a great answer,” he said.Thompson said the trade war isn’t just affecting the construction business.He grew up on a farm near the St. Lawrence River, where he remembers falling asleep listening to shipping traffic on the Seaway and trains across the river in Canada. He later married a Canadian and has spent almost 50 years living and doing business in a region where communities on either side of the border are closely intertwined.That relationship has noticeably changed since the U.S. began its trade war, he said. Southbound traffic across the border has sharply fallen, hurting businesses in northern New York that depend on Canadian visitors and commerce.“I’m really passionate about our U.S.-Canadian relationships,” he said. “We need to get it fixed. Our area desperately needs it.”Thompson said he understands some of the anger in Canada after months of antagonism from the U.S., including talk of annexation.“I don’t blame these people,” he said. “I’m not sure I’d feel any differently if I were on that side of the river listening to this foolishness.”As for cement, Thompson doesn’t believe the product itself was necessarily singled out. He sees it as one part of a much larger trade dispute that has engulfed a relationship built over decades.“We’re just rolled into a bundle of a big-ass mess,” he said.We apologize, but this video has failed to load.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.