If you own a construction or trades business in BC, you already know that rising material costs and supply chain disruptions are making it harder to stay profitable. Now, U.S. tariffs on Canadian steel and aluminum are adding another financial challenge—and it’s not just a pricing issue. These tariffs can impact your contracts, workforce costs, and even your legal obligations as an employer.
Here’s what you need to know about how tariffs could affect your business—and what you can do to stay ahead.
1. Your Contracts May Not Protect You from Cost Increases
Most trades businesses use standard contracts, like the CCDC 2 Stipulated Price Contract, for projects. But not all contracts allow you to pass unexpected tariff costs onto clients—which means you may have to absorb those costs yourself.
What to Check in Your Contracts:
✔ GC 10.1 (Taxes and Duties) – If your contract doesn’t allow for cost adjustments due to new tariffs, you might not be able to recover those expenses.
✔ Escalation Clauses – Some contracts allow for price increases due to unforeseen costs. If yours doesn’t, you may be locked into current pricing.
✔ Subcontractor Agreements – If your material costs go up, will your subs expect to renegotiate their rates?
What You Can Do:
- Review your contracts carefully before signing new deals. Make sure you understand whether you’re on the hook for tariff increases.
- Talk to your legal and HR advisors about renegotiating contracts or adding cost recovery clauses for future projects.
- Communicate with clients upfront about pricing risks due to tariffs—surprises lead to disputes.
2. Rising Costs Could Lead to Workforce Decisions
If tariffs drive up material costs and you can’t pass those costs on, you’ll have to make tough decisions elsewhere—and labor is usually the biggest expense in any trades business.
What This Could Mean for Your Workforce:
❌ Hiring Freezes – Uncertainty might make you hesitate to bring on new employees.
❌ Project Delays – If financing or contract prices get squeezed, you may need to push back jobs.
❌ Wage Pressure – Workers will still expect raises, even as margins tighten.
What You Can Do:
- Plan ahead for workforce costs. If you know tariffs might impact your bottom line, forecast your labor needs early so you’re not making last-minute cuts.
- Consider temporary or project-based hiring models. This keeps your workforce flexible without committing to long-term costs.
- Be transparent with your team. If costs are rising and changes are coming, clear communication prevents frustration and turnover.
3. Layoffs and Workforce Changes Come with Legal Risks
If you need to adjust staffing levels or restructure your workforce due to financial pressure, you can’t just cut jobs and hours without consequences. Employment laws in BC are strict about layoffs, terminations, and contract changes.
Legal Pitfalls to Avoid:
⚠ Wrongful Dismissal Claims – If you lay off employees without proper notice or severance, they can take legal action.
⚠ Unpaid Overtime Issues – Cutting staff means others might work extra hours—make sure they’re being paid correctly.
⚠ Subcontractor vs. Employee Misclassification – If you shift work to independent contractors, ensure they meet the legal criteria to avoid fines.
What You Can Do:
- Know your obligations. Before making staffing changes, check BC’s employment standards on layoffs, notice periods, and pay adjustments.
- Use HR expertise. A solid workforce strategy can help you avoid unnecessary terminations and manage costs more effectively.
- Keep employee morale in mind. Sudden cuts can damage your reputation and make it harder to rehire skilled tradespeople when things pick up again.
4. Smart Workforce Planning Can Help You Weather the Storm
Tariffs are unpredictable, but a strong HR and workforce strategy can keep your business stable—even when costs rise.
Ways to Protect Your Business:
✅ Negotiate better contract terms so you’re not stuck with unexpected costs.
✅ Create a flexible hiring model that allows you to scale up or down as needed.
✅ Stay compliant with labor laws to avoid legal trouble when making workforce changes.
✅ Communicate with your team to keep morale high and reduce turnover.
Bottom Line: Plan Ahead to Protect Your Business
Tariffs and cost increases are out of your control, but how you handle them is up to you. By reviewing your contracts, planning your workforce costs, and staying legally compliant, you can keep your business strong—without making reactionary cuts that hurt in the long run.
If you need guidance on workforce planning, compliance, or HR strategies to navigate rising costs, working with an HR expert can help you avoid costly mistakes and keep your team running smoothly.
Rebelution HR Consulting LTD. 