Rising Costs Ahead? Homeowners and the HVAC Industry Brace for US Tariff Effects

You want a fair price when you replace your furnace or air conditioner. You expect the cost to be based on materials, labour, and maybe a bit of brand markup. What you don’t expect is that government policies will make your HVAC system more expensive.

But that’s exactly what’s happening with tariffs on steel and aluminum, as well as potential blanket tariffs on all imports that the Trump administration has threatened to implement, some of which are currently on hold. 

The idea behind these tariffs is to protect local industries and jobs. The problem? That “protection” comes at a price—one that lands right on your invoice when it’s time to upgrade your HVAC system.

In addition to potential tariffs imposed by the United States government, the Canadian, Mexican, Chinese, and European governments could implement retaliatory tariffs which could further increase costs.

The global supply chain is complex, and many products are manufactured with parts or materials that cross several borders, which can make the impact of tariffs tricky to assess accurately. 

So, what do these tariffs actually mean for homeowners? Is it the best time to buy HVAC units for your home? Let’s break it down.

Overview of the Tariffs

The HVAC industry is bracing for price hikes as trade tensions escalate between the United States, Canada, and Mexico. US President Donald Trump initially threatened blanket tariffs on imports from Canada and Mexico, despite the USMCA free trade agreement that Trump himself renegotiated during his first term, replacing the old NAFTA agreement. These tariffs were put on hold shortly thereafter but may still come into effect at a later date.

However the Trump administration did reinstate a 25% tariff on all steel and aluminum imports, a move that directly impacts HVAC manufacturing. 

These tariffs, aimed at protecting American industries, extend beyond raw materials, affecting key HVAC components like compressors, fan motors, and coils (many of which are imported).

Steel plays a major role in HVAC production, and the US relies heavily on imports. About a quarter of all steel used in the country comes from abroad, with Canada, Brazil, and Mexico as the top suppliers. 

From March 2024 to January 2025, Canada alone accounted for 22% (5.47 million tonnes) of US steel imports, while Mexico contributed 12% (2.9 million tonnes), according to the International Trade Administration. The aluminum market is even more dependent on Canadian supply, with nearly 40% (3 million metric tonnes) of US imports coming from Canada in that same period.

In response, Canada has announced $155 billion in retaliatory tariffs on US goods, further escalating trade tensions. 

Impact on HVAC Equipment Prices & Availability

The HVAC industry is facing a major pricing shake-up, and it’s not looking good for contractors or homeowners. 

The Heating, Refrigeration, and Air Conditioning Institute of Canada (HRAI) recently surveyed its members (manufacturers, distributors, and contractors) and found that nearly 70% are seriously concerned about how tariffs will affect their businesses. Some expect significant financial strain, while 18% fear it could be devastating.

Industry experts warn that HVAC equipment prices could rise 20-40% in the coming months, with the Association of Equipment Manufacturers projecting a 7% increase in production costs due to higher material prices. 

Here’s what’s actually driving these costs up:

1. Raw Materials Are More Expensive: Steel and aluminum tariffs make the metals used in HVAC systems—like heat exchangers, coils, and sheet metal casings—more expensive. When manufacturers pay more for materials, that cost is passed down the line.
2. Higher Manufacturing Costs: With pricier raw materials, manufacturers either absorb the loss (unlikely) or adjust their prices. That means contractors and distributors will pay more per unit, which trickles down to homeowners and business owners looking for new systems or repairs.
3. Delays in Getting Essential Components: Many HVAC components—compressors, fan motors, and coils—come from international suppliers. Tariffs increase costs and complicate logistics. Longer wait times for these parts mean slower production, leading to delays in consumer availability.
4. Freight and Supply Chain Issues: With higher tariffs, some manufacturers will shift sourcing to alternative suppliers outside Canada, the US, or Mexico. That means additional shipping costs, customs fees, and logistical headaches, contributing to higher end-user prices. Some companies may attempt to shift some production to the US, as president Trump hopes, but that can be a difficult, costly, complex, and time-consuming process.

What It Means for Consumers

If you’re planning to replace your furnace or air conditioner, expect longer wait times and higher price tags. Contractors may have less inventory, meaning fewer choices and potential delays in getting units installed. Homeowners looking for repairs may also face increased costs, especially if key replacement parts are harder to get.

As these tariffs take full effect, HVAC buyers must weigh whether to buy now before prices climb higher or hold out and hope trade tensions ease. 

Who Will It Impact Most?

Contrary to what some believe, tariffs are not paid by the exporting country but rather the importing one. They are effectively a tax levied by the government on whoever is importing products or materials. This may be a manufacturer in the United States importing materials or parts, or a distributor importing finished HVAC systems. In most cases, that additional cost will be passed on to the consumer in the form of higher prices. 

These tariffs are likely to hurt the pocketbook of both Canadian and American homeowners, as they increase the input costs and the cost of the finished product. Because of how integrated the entire supply chain is between the United States, Canada, and Mexico, and to some extent China and other countries, the end result is that consumers will simply pay more for many goods, including HVAC systems.

That may be a tough pill to swallow for consumers that have already been hit hard by inflation in recent years.

Impact on Consumer Demand

With costs climbing, many consumers may postpone replacing their HVAC systems. They may choose to repair aging units or simply tolerate inconsistent heating and cooling. 

Contractors may see more homeowners opting for quick fixes over full system upgrades, even if their units are outdated and inefficient. 

In the immediate future, there could be a rush to buy before prices rise even further. Homeowners already considering an upgrade may pull the trigger sooner to avoid the higher costs coming down the line. This could create a temporary sales boom, but once that wave passes, demand may drop as affordability becomes a bigger issue.

Budget-conscious homeowners may also downgrade their expectations, settling for lower-end HVAC models instead of investing in high-efficiency systems. 

While this might save money upfront, it could increase long-term energy costs, putting more strain on household budgets. It also has environmental consequences, as older or less efficient units consume more energy.

Trade Agreements and Mitigation Efforts

Industry leaders, including the Canadian Institute of Plumbing and Heating (CIPH), the Mechanical Contractors’ Association of Canada (MCAC), and the Heating, Refrigeration, and Air Conditioning Institute of Canada (HRAI), are sounding the alarm. 

These groups warn that rising costs could disrupt supply chains, slow economic growth, and make HVAC equipment more expensive for both businesses and homeowners.

With the latest tariffs set to take effect on February 1, industry experts are urging the Canadian government to act before the situation worsens.

Overall Health of the HVAC Industry

Despite the challenges brought on by tariffs, the HVAC industry remains resilient. Demand for heating and cooling solutions isn’t going away. People will always need comfortable indoor environments, whether at home or in businesses. However, companies across the supply chain will need to adapt to changing costs and sourcing challenges.

Some manufacturers may have to adjust production schedules, delay expansions, or freeze hiring to manage rising costs. In certain cases, companies might explore alternative suppliers or invest in domestic production to reduce their reliance on imported materials. 

Major HVAC brands like Carrier, Daikin, Lennox, and Trane—which together hold over 60% of the US market—operate large manufacturing facilities in Mexico and source components from China. 

With tariffs affecting both steel and international parts, these companies may face higher production costs and pricing pressures. However, they also have the resources to adapt through automation, supplier diversification, and production shifts.

For Canadians, some may choose to opt for one of the relatively few Made-in-Canada brands like Napoleon.

Conclusion

The HVAC industry is going through changes. With tariffs driving up material costs and supply chain challenges affecting availability, waiting to replace your HVAC system could mean paying significantly more in the near future.

If you’re thinking about upgrading your furnace, air conditioner, heat pump, or any HVAC equipment, now is the time to act. Lock in current prices before increases take effect and avoid potential delays in getting the equipment you need.

Get a free quote today! Our Certified Local Heating Contractors will reach out to you, schedule a free consultation, and help you find the right system at the best price possible. Don’t wait—save money while you still can!

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