U.S. President Donald Trump’s threatened tariffs on imports from Canada will cause major damage to the B.C. industrial real estate development sector, says a leading design-build construction firm executive.

“They’re going to be disastrous, guaranteed,” said Josh Gaglardi, founder and president of Orion Construction, in an interview with Connect CRE Canada.

“I remember when he put just the steel tariffs and aluminum tariffs in [2018], and we were a busy market at that time. We’re not a busy market now, but at the time, the price of warehouse went up about 10% so that was impactful then. Now, fast forward [six] years and the cost of construction is higher, availability is higher, the market’s much slower. We’re pushing the limits on what people can pay.”

He said the looming tariffs will add another “extraordinary cost” to the expenses mix. The province’s other commercial real estate development sectors will also be hit hard, because they are all at the top of their affordability levels, Gaglardi added.

Trump has wavered on the exact timing of the tariffs, which he originally pledged to implement when he took office in January. He has now pegged the implementation date as April 2 with White House officials suggesting that they are still on schedule for March 4.

Gaglardi said the industrial sector will have a few months’ reprieve after the tariffs come on stream as developers work through their inventories of surplus construction materials.

“But after that, everything’s in play: New pricing and whatever the political landscape is then,” said Gaglardi.

Construction firms servicing the industrial sector and other asset classes across Canada will face the same dilemma, he added.

“It could be worse if it’s retaliatory tariffs, people going back and forth,” said Gaglardi. “But over time, we can’t win because we’re a 10th of the size of the United States and their biggest trading partner. So on a project basis, costs will go up, which is, like I said, monumental, because costs are already so high. They’re hard to absorb by consumers.

“But now they will continue to go up, and now the tariffs will impact the end user as well. So, people who have a business and have a warehouse or a retailer that sells to the States, they may lose orders. So, their business will be impacted negatively. So, [the tariffs’ effect] hits on multiple levels.”

Langley, B.C.-based Orion is a specialty design-build contractor. Orion services three main pillars: Industrial and other commercial, in which the company builds about one million square feet of developments per year, and multi-family, constructing approximately 300 to 500 units per year.

The company also has a tenant-improvements division that completes five to 10 of such projects annually.

The uncertainty is causing fast-growing Orion to invest less as the firm seeks to weather the impending storm.

“We’ve been in, call it, three years of uncertainty,” said Gaglardi. “I was hoping ’25 would be the year that we’d see a little bit more certainty in the market and maybe a bit of greener pastures, because we haven’t seen those in a long time.

“But we’re forced to be very intentional with what we do with our investments now. So, we’re very cautious in B.C., we’re very cautious globally for sure, and we are the position that it’s going to be a year of austerity for our organization. We’re going to keep our cash close to see what happens. No choice.”

He also expects the looming tariffs to increase B.C. development-land costs.

People just can’t pay, and the market is already bad as it is now,” he said. “This is just making it worse.”

Orion has begun to build self-storage structures for clients. The sector was viewed as one that could outperperform other industrial properties before Trump issued his tariff threats.

Gaglardi said self-storage investors and developers are still “pressing forward” despite the uncertainty and potential cost increases.

“Now, those projects are also probably 60% steel,” he said. “We’ll see how the tariffs impact that. But those users and those operators seem to see the demand, and they seem to want to see those projects move forward.”

As for dealing with a potential trade war with the U.S. going forward, Gaglardi said Canada could restrict exports of Eastern Canadian steel, hurting the U.S. auto sector, and Alberta energy. (Alberta Premier Danielle Smith has balked at that idea as Trump plans a more modest (10%) tariff on oil and gas imports.)

B.C. might also be able to restrict LNG exports south as the new LNG Canada plant in Kitimat comes on stream later this year, Gaglardi added.

“Canada is America’s largest trading partner, so what we do does have some impact on them to a small scale,” he said.

But Gaglardi would prefer to see Canada implement a strategy focused on negotiation rather than retaliation.

“I think there’s a greater negotiation that needs to happen with Trump, rather than trying to retaliate and get into a, basically, bidding war with someone who’s got 10 times the resources as us,” said Gaglardi.

Photo: Courtesy of Orion Construction