International Trade Committee on May 26th, 2026

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot—Acton, QC]

A number of experts have appeared here. They expect the United States to leave open the possibility of an annual review to constantly extract concessions through the sunset clause.

Do you share that fear?

If so, is wood currently at the top of the list in terms of those pressures?

How can we avoid this scenario?

[Kevin Lee]

Certainly it's a big problem when you don't have certainty in cost. That will affect multi-unit construction even more so than low-rise, single-family construction, because the build-out is that much longer. You're creating all kinds of uncertainty in that phase if you're renewing this every single year. By the time you're actually building, the prices might be completely different from what you sold the original home for.

It's going to be problematic for any industry, but for housing in particular and projects that are going to take more than one or two years to build, it would be a huge issue. Anything we can do to create long-term certainty is of course very welcome.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot—Acton, QC]

I know you're working with the National Association of Home Builders. This association is among those most opposed to tariffs from the United States. This isn't a new thing. This was already being discussed under the Biden administration.

We ourselves, during a committee mission or a mission by the Canada-United States Inter-Parliamentary Group—I'm no longer sure which it was, since I took part in both missions—met with representatives of that association. They're really trying to make the Americans aware that, at the end of the day, the Americans are the ones who will have to foot the bill for the tariffs in the midst of a housing crisis, and that this means this wasn't really the right time to impose them.

Are you making joint and coordinated representations to the Canadian and American governments to try to sort of get everyone to sit down at the table and discuss the CUSMA review or the softwood lumber tariffs?

[Kevin Lee]

Yes. To your point, it's been an ongoing issue for the National Association of Home Builders in the United States because, further to my commentary earlier, the tariffs on softwood lumber are a major issue for construction costs south of the border. That's been an ongoing effort.

There are several organizations in the United States pushing back against all of these different tariffs. Even Canadians initially, when the tariffs started, didn't understand that U.S. tariffs on Canadian goods affect the price of American goods. In our case, that's American houses, not Canadian houses. It's the countertariffs coming our way that are problematic.

As we've said the entire time, the biggest issue for Canada isn't so much the tariffs. It's all the uncertainty and the economic harm that we do. That makes it very difficult for people to make the decision to buy houses here in Canada.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot—Acton, QC]

Okay.

Mr. Lee, we're familiar with the “buy American” policy. However, there is also a desire to establish a “buy Canadian” policy. There is a clear desire from the Canadian government to include more Canadian steel and lumber in construction.

Do you welcome that?

Are you concerned that it could lead to an escalation?

On the contrary, to negotiate well, isn't it preferable to respond to such a policy with a similar policy?

[Kevin Lee]

I think it is good.... It's always good to buy Canadian. We can all agree on that.

The challenge is when you're talking about integrated supply chains. We can use steel as an example. We have steel mills on both sides of the border that are very close to each other, but they specialize in different types of beams. A Canadian plant will do one kind of beam, and the American plant will do a different kind of beam, so retooling everything is very expensive and not necessarily efficient because you don't get the same kinds of efficiencies of scale and volume.

There's no question that re-establishing CUSMA and having that kind of certainty.... There's a reason that has been done over the years. It creates certainty, efficiencies and lower prices.

In the long term, if we're not able to get that certainty from the United States, then there are going to have to be different types of investments, and there's going to be a certain amount of investment in Canada. Also, the number one reaction, really, to what's going on with the United States is this: Who else can produce and compete?

It's not natural to try to do everything domestically. It's not efficient. It's not effective. Free trade has had a good impact on most of the world in raising the standard of living.

It's a very unfortunate situation—to make the understatement of the year—going on with the United States, but the solution is to try to fix what we have and/or work with other partners, because trying to do everything domestically would not be efficient and effective. There's only so far we could go with it that would make sense from an economic perspective.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. McKenzie, go ahead for five minutes.

[David McKenzie, Conservative, Calgary Signal Hill, AB]

Thank you, Madam Chair.

Mr. Lee, I'd like to pick up right there. I have to presume that, in your role, on behalf of your members, you have conversations with your counterparties in the United States, and I have to presume that they're expressing the same degree of consternation and concern about the turbulent times that we're in, from a trade perspective.

Is that accurate? Are they hurting in the same manner that our industries are?

[Kevin Lee]

They are, as I said, around lumber and increased prices.

What is working in their favour a bit is less regulation. It's something we talk about here in Canada, around housing, home construction and the need to look at things like the building code, especially things at the municipal level where we have all kinds of codes by other means that make it very difficult to build the same house over and over again.

It's about getting much smarter about regulation and streamlining. It's not abandoning regulation, but being much smarter about how we do things so that we can get things done much more effectively. They've always been a bit better at that in the United States, and they're taking a more aggressive stance on some of those things.

To your original question, they're super concerned about increased prices, tariffs and all the rest, but they're also pleased to see a bit more movement on deregulation, which we probably all need to follow. Australia has paused building code changes, for example, for the next five years. That's something we should do as well.

[David McKenzie, Conservative, Calgary Signal Hill, AB]

Indeed, and that's an entirely additional subject area—what we can do, in Canada, about things over which we have complete control, at this point in time, which is not the case with our international agreements.

I want to ask you about a specific aspect of the building industry, and that is prefabricated or modular homes. To my understanding, that remains a very small percentage of the Canadian residential market, primarily. It's in the single digits.

Is that accurate? Can you explain a bit about what happens in that share of the marketplace?

[Kevin Lee]

Absolutely. Especially when you're talking about 3-D modular, it's in the low single digits—3%, maybe, give or take. We have a lot more of our members using panelized construction and different forms. There's factory-built and there's factory-built. Sometimes it's doing the same thing, just in enclosed conditions, and sometimes it uses more automation.

There is an opportunity to make much more use of it. The reason that we haven't gone that route, though, in Canada—and, by the way, in the United States and Australia, three very similar countries when it comes to home construction practices—is the boom-and-bust nature of the housing market.

Productivity is misunderstood in residential construction. I won't get into that right now, in these couple of minutes, but, basically, we do run assembly lines. It's just that they're in a house, so the trades run through the house, and it's actually really efficient. What we don't have is a ton of overhead. We don't have big buildings. We don't have huge machinery that basically makes companies go bankrupt when things slow down.

That's the main obstacle we've had in the western world—frankly, in most countries. There are some countries that became heavily automated through government investment over time. However, there are some countries that have been trying recently, like Ireland, to put a bunch of money into it, and those companies are actually failing.

I'm not saying we shouldn't go that route. We have a modular construction council within our association. We have a sector transition strategy on how to move there, but it's also not as easy as “It's just faster. Let's do it.” By the way, I should also add it's not cheaper, and our factories will tell you this.

There are all kinds of great advantages. It's way faster. Time is money, so if you can get municipal approvals done and everything working well, you can save some money that way. However, our big challenge is in trades and not enough workers. That's why we believe we need to move to much more factory-built moving forward, but there are other barriers that might not be obvious, sometimes.

[David McKenzie, Conservative, Calgary Signal Hill, AB]

Clearly, if I wanted to build, let's say, 500,000 homes a year, prefabricated and modular is not a magic panacea to achieving that, I think—and correct me if I'm wrong on that. You've also touched on something else that I think is quite important. If I wanted to build 500,000 additional housing units per year, do we have the labour capacity in Canada right now to do that?

[Kevin Lee]

We definitely do not, which is not to take away from the idea of doubling housing starts. That's a really important target.

More importantly, there are so many things in the way of getting there, including housing affordability, regulation and code interpretations, which are different among different municipalities and even among different building officials. There are so many things in the way of doing things at speed and affordably. Labour isn't our number one issue. If the market were better, labour would be close to our number one issue. That's another reason that factory-built will be so important.

To your point, there is no panacea to all of this, but we have to do all of the things because all of the things have gone the wrong way, and we have to do all of the things to correct that and to move forward.

[David McKenzie, Conservative, Calgary Signal Hill, AB]

Again, if I were to announce that I am going to build 500,000 housing units a year, that's a great headline, but there's a lot of groundwork that is still in front of me before that's going to be accomplished. That's not going to be next year. It's not going to be the year after. The situation you're describing to me sounds as though it's years and years down the road.

[The Chair, Liberal, Judy Sgro]

Can I have a brief answer, Mr. Lee?

[Kevin Lee]

Sure. It is going to take years. We have to start the steps now in a bunch of different ways. Some have started but more need to be done, and then we can get there.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Naqvi, go ahead, please.

[Yasir Naqvi, Liberal, Ottawa Centre, ON]

Thank you very much, both of you, for coming and sharing your thoughts on this really important topic.

I think it's very clear that the challenges you're all facing in your respective industries, vis-à-vis the United States, were not made by Canada. They were thrust upon us.

We know that NAFTA and then, subsequently, CUSMA, are really well-thought-out agreements. They are model agreements that worked really well for the benefit of not only Canada but the United States and Mexico as well. I say that based on my own experience as a trade lawyer. In the past, other countries looked at NAFTA, at that time, as a treaty they wanted to replicate in terms of the impact on the economies, the integrated supply chains and the resiliency that was built into the supply chains.

Here we are. We find ourselves at this juncture. Of course, the task put upon us is to get the best deal for Canada and Canadian industries. Nothing less, in my opinion, should suffice. We cannot rush ourselves to a place where we get an agreement that is not beneficial to the sectors, to the industries you're talking about.

What I would like to hear from you are your suggestions or recommendations. If you were advising the Government of Canada in these very challenging negotiations and conversations, what position would you take? What would you suggest—overall and, more particularly, from the perspective of your particular industries—should be the position, the stance, that the Canadian government should be taking?

I'll start with Mr. Lee, and then go to Mr. Sweeney.

[Kevin Lee]

There's no question that if we could just keep going with CUSMA as is.... To your point, it's an excellent agreement. It has kept the tariffs way down on most materials. As I said earlier, the fact that we're able to continue right now with limited impact on the price of construction, given the trade war that is going on, is a testament to how well CUSMA has been structured, at least for our industry. That's definitely the objective.

I would concur that we can't rush into anything for the purposes of solving a problem that is really a bad deal for Canada, especially given that we shall see, whatever agreement comes with CUSMA, how permanent that is, given the nature of what's been going on with negotiations with the United States and ongoing volatility.

I would suggest that it's going to be critical that we do everything we can to get the proper deal. Something as close as possible to the current arrangement would be ideal. Those are the types of deals that we need to continue to expand on with the rest of the world, given the uncertainty that we see south of the border.

We can make more stuff in Canada, but it doesn't make sense to try to make everything in Canada, so having strong trade relations with the rest of the world is going to be doubly important in these times.

[Brendan Sweeney]

Stay focused, communicate the value of an integrated North American economy persistently and relentlessly to both friends and others south of the border and avoid distractions wherever possible.

[Yasir Naqvi, Liberal, Ottawa Centre, ON]

Thank you.

The last point is really important, the distraction part, because there are a lot of distractions on a regular basis, unfortunately. Focus and discipline are imperative in these negotiations, and I think that's precisely what the Canadian government is doing.

Mr. Sweeney, your members, Honda and Toyota, are two very large auto manufacturers in the world. They export directly from Japan to the United States through Canada and other parts of the world. Are you able to share with us their attitudes towards the stability of any agreement that's reached? Mr. Lee alluded that sometimes there are some doubts whether the agreements signed are even worth the paper they're written on. There has been some back and forth vis-à-vis Japan as well.

What's the understanding from your members in that regard? What is their advice to Canada to make sure that whatever deal we do land is, in fact, permanent?

[Brendan Sweeney]

For clarity, I represent Honda's and Toyota's Canadian interests, not their interests in Japan.

I think that our members in Canada would put some trust into a freely negotiated or renewed CUSMA, if we achieve that.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll go to Mr. Savard-Tremblay for two and a half minutes.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot—Acton, QC]

Thank you, Madam Chair.

Mr. Sweeney, I'd like you to tell us specifically about the case of aluminum. We know that this is an important part of the situation.

A number of people have testified on this subject before the committee, including representatives of the Aluminium Association of Canada. They submitted a brief stating that the follow-up measures in Mexico were insufficient to determine the true source of aluminum. That means there is dumping going on, probably by China or India, just to mention the two main culprits.

Have you looked into that issue?

[Brendan Sweeney]

I'm here today to speak on behalf of our members in the automotive industry. I agree with you that aluminum is important, but I'm not the right person to speak about aluminum.