Ep 038: Trump Tariffs vs The Canadian Pool & Spa Industry

In this episode of the PromoMinds Podcast, Steve Leslie discusses the impact of the Trump tariffs on the Canadian pool and spa industry in 2025. With new 25% tariffs on all imports from Canada to the U.S. set to take effect on March 4, Steve provides an analysis based on past trends, current economic conditions, and what swimming pool professionals can expect moving forward.

Key Discussion Points:

• Background on Tariffs:
  • A 25% tariff on Canadian imports was confirmed in an article from the Financial Post, released on March 2, 2025.
  • Similar tariffs were imposed on Canadian steel and aluminum in 2018, which led to an oversupply in the Canadian market, temporary price drops, layoffs, and eventual price increases.
  • The previous tariffs were lifted in 2019 after renegotiations between Canada, Mexico, and the U.S.
• Potential Industry Impact:
  • The tariffs may lead to new trade routes as Canada seeks alternative export markets.
  • Steel price fluctuations could influence the cost of materials for pool construction.
  • Unlike 2018, the current economy is weaker, with a lower GDP and concerns over mortgage renewals and delinquencies.
  • Higher costs could eventually drive up pool and spa prices, making early investments more attractive.
• Economic Factors at Play:
  • Rising inflation and higher costs for Canadian consumers.
  • The weakening Canadian dollar makes U.S. travel more expensive, potentially keeping more spending within Canada.
  • Increased focus on backyard renovations as an alternative to expensive vacations.
• Strategic Opportunities for the Pool & Spa Industry:
  • Creating Urgency: Encouraging customers to invest in pools now before prices rise further.
  • Promoting Backyard Investments: Emphasizing the long-term value of enhancing outdoor living spaces instead of spending on international travel.
  • Monitoring Government Support: Possible financial assistance or stimulus measures could provide relief or incentives for homeowners.

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#tariffs #swimmingpools #canada #construction #trump #canadiansteel

Chapters

• 1:55 What We Can Learn from 2018 w/ Tariffs & Canadian Steel
• 5:54 What's Different between 2018 vs 2025 for Tariffs & Canadian Steel
• 9:38 Where Are The Advantages for Canadian Swimming Pool Professionals?
• 18:24 Where Can You Find Canadian Made Swimming Pool Products?
• 22:13 A Tool For Looking Up Where Products Are Made

Transcript

Hey everyone, welcome to a brand new episode of the PromoMinds podcast. I'm your host, Steve Leslie, and today we're going to be talking about how the Trump tariffs will affect the Canadian pool and spa industry in 2025. And so I'm excited for you guys to join me on this.

It has been a little bit since we've done this podcast, so let's jump right into it. And what we're going to discuss here, obviously how the tariffs are going to affect the pool industry in 2025. But I want to give you a little bit of background on what we've seen in the past, what we've learned, and a little bit of what we're seeing currently to give you a better indication on what to expect or likely expect for the rest of the season.

So let's get to it. And yeah, so let's jump right in. So the problem with this obviously is, and I found out from the Financial Post that it's going to be 25% on all imports.

And this was from an article just posted yesterday, which was Sunday. So I'm recording this on Monday, March 3rd. And the Trump tariffs are supposed to be enacted tomorrow, so March 4th, for an undisclosed amount of time.

So right now, I'm assuming it's going to be going on until it's not, basically. But this was also done by the Trump administration in his first term as well. So if you look back at 2018, you'll see that the same thing happened.

Actually, it was the exact same thing with the Canadian Steel. So it had 25% tariffs that were on it until 2019, when Canada, Mexico, and the US renegotiated their trade. And then that was taken off the table.

So if we look at what happened during that time, you will see that once the tariffs came into play, it created an oversupply in the Canadian steel market because the US consumers, they started looking elsewhere for more cheaper options. This created an oversupply in the Canadian market, leading to layoffs. And actually, because of the oversupply and demand coming down, steel prices went down in the short term.

But then over time, I think towards the end of the year, they jumped up pretty high. So if we take what happened in 2018 and apply it today, we could see the same sort of thing where there'll be an oversupply that happens. So layoffs occur, other trading routes can be established as well.

And that was also played, these tariffs played a huge factor into the supply shortages that we experienced during the COVID era as well. Not saying that they were the entire reason for it, but it started the undertaking of new trade routes. So if a ship was coming from China and it stopped in, say, France before going to the US and then picking up commodities there, going back to China, well, if there were less trade that was done between China and the US, because that's kind of what kickstarted during Trump's first term, there were new trade routes that were being established.

So I'm just talking off the top of my head. Let's say China was buying bananas from the US. And instead of buying bananas, or I guess oranges are probably a better fruit to go with, but instead of buying oranges from the US, maybe they bought it from Mexico instead.

So they started shifting some of those trade routes. And then obviously we got hit with the pandemic, which further added to the strain. And so I'm just saying that part of the supply issues during the pandemic were because these new trade routes were being established.

So there is a strong possibility that that could occur in the coming months as well, because Canada will have to find new trading partners, right? If they want to, if Canadian, in the Canadian market, if they want to sell their steel elsewhere other than the US, they're going to have to open up different markets. So we'll see how that plays out. However, the difference, a couple of variables that are happening now is that in 2018, we still had a relatively strong GDP, strong dollar.

We didn't, we obviously hadn't gone through the pandemic at that point. So the whole process of demand went down, oversupply, therefore we had a short-term drop in steel prices. But then over time, it kind of worked its way out and actually increased the steel prices quite a bit.

So now we are in an age where we have a weaker dollar, we have weak GDP. And so absorbing that is a little bit harder right now. Not to say that that will continue, but right now that seems to be the case.

On top of that, there's also a wide, a large amount of mortgage renewals that are coming this year and have started happening in the last year. And so there's a big worry in the banking industry right now about delinquencies because that's been on the rise. Because just to refresh your memory, what happened in 2020 with the pandemic, we saw interest rates hit an all-time low.

And that really kickstarted this inflation bubble that we went into where people were buying up houses and for like cheap money. And then subsequently we had the rise of interest rates, that whole boom stopped. And we reached the peak of the bubble coming back down.

We're not quite down to where interest rates were five years ago. So it'll be interesting to see how that plays out. Now, I will say that because of that era and because of the rising costs for all different products and types of pools, there's a lot of say middle-class families have been priced out of the market.

And so those that are coming up for renewals, yes, I think there'll be a group of those people in like upper class that will be affected by that. But for the most part in the last few years, it's been a lot of the industry from what I've seen is that for new builds are coming from those who are well off, well diversified and how the market fluctuates doesn't affect them as much. So I don't think that'll play a huge role in the target audience for the pool and spa industry.

But it'll be interesting to see how this storm plays out. And I've been saying since late last year that I think 2025 is going to be a little rocky, but I think overall we're going to be up compared to 2024 and of course 2023. So where are the advantages? That's really what I don't want to be like doom and gloom.

It's all bad. No, because as I said, looking back at 2018, we saw short-term prices go down. So and knowing that there's tears coming and usually that sparks inflation.

Going back to the Financial Post article that I was reading, they had mentioned that I think I believe it was Tiff Macklem, who's the governor of the Bank of Canada. He said a little bit of troubling things, but overall it basically pointed to inflation. And how the tariff talks all began was it was going to be placed on Canadian steel and aluminum.

And so now we're looking at all $900 billion worth of products coming from Canada to the U.S. So you know that next year, those prices are likely going to go up. If it's anything like 2018, the prices long-term, even a year from now, will be higher. Right.

So there's an advantage there with creating a sense of urgency. Because as I mentioned, a lot of the new builds that I've seen are from those individuals and those families that they are well off enough that fluctuations in the market, mortgage renewals, they don't necessarily affect them as much. So putting a pool in isn't, you know, it's really no sweat to them for the most part.

So with that, you can create a bit of urgency by saying, hey, we know that prices are going to be up next year. Right. So if you're thinking about putting in a pool, do it this year, because this will be the best time in the next couple of years to do it.

Right. And like I said, create some urgency. Also, on top of that, with the boycotting of the U.S. Right.

A lot of people have cancelled their travel plans. And whether that's due to, you know, the relationship between Canadians and the U.S. or on top of that, being that the dollar has gone down so much, you're paying, you know, 50% more per like every dollar is 50% more that you're paying in the States. Right.

And there's a lot of things that will be priced cheaper if you're looking at just the dollar signs on the product. There's a lot of cheaper things in the States, but groceries, they are pretty much on par. So you're actually getting a way better deal in Canada buying groceries.

And that seems to be kind of all throughout the U.S. From what I've seen. So there's with that information, where I'm going with that is we could be seeing a little bit of what we saw during the pandemic, where there was this push for putting money into your own backyard, less traveling abroad and more or less staying home. And so I think we could see a little bit of an uptick from that perspective as well, because why go and spend, you know, an extra 50% on your dollar going into the States, supporting the States over Canada.

And you know that if you're wanting to put a pool in at some point, this is the best year to do it moving forward, at least in the next couple of years. Right. I think that's safe to say.

So there's a few advantages there now. You know, obviously we've heard from the federal government in Canada that with these tariffs go through, at least at the start of February, if these tariffs go through, there's the possibility of more money printing to back up, excuse me, Canadian businesses and people. Similar to the COVID era.

So if that actually comes to fruition, which it's still, it's just, you know, there's nothing in place right now. But if that were to come to fruition, we could also see maybe some government subsidies, possibly for the industry. I don't know.

Again, that's just, you know, just hearsay right now. Right. So there's a potential for that as well.

So just keeping that all in mind, that it's a great time to push some urgency to do it this year. There's also the push for, you know, the backyard oasis and investing at home instead of abroad. You're investing in the local economy.

You're investing in your house, your family, local economy. Your dollar is going to go further. And this is a great year for people to do it.

Right. So those are some potential advantages for you this year. And so I had posted on my Facebook that I was going to be doing a podcast about this because I had been getting calls and texts, emails about what do we expect to see in the coming months? Right.

And a large part of that was the underlying tone, I should say, is where are the prices going to be? Like, are we going to see a price increase right off the bat? And so I can say, talking with Brian, the owner at Highbury Pools, that we are set for most of the year. So if we see price like this, the price of steel has gone up since the initial threat of tariffs. And so that we've already got our steel for most of the year.

So right now, it's not that doesn't affect us. We've gotten most of our product from Hayward. You know, we got all of our vinyl as we get most of our vinyl from CGT out of Cambridge.

But there are a few patterns that we get from the States. And I believe in our marketing packages, we're going to be denoting the Canadian vinyl versus the American vinyl, right? Because that's an important thing. Actually, I was talking to a dealer today, and they had said that they had people that came in and specifically said they would not buy this product, this particular product, because it was made in the States.

And they actually had a good rebuttal to that. And it was, well, by doing that, you're actually not supporting a local business because we've already bought this. We've already paid for that.

Like, it would be different if they were coming in, custom order. Yeah, sure, we can get that in. That's a whole different story.

But they already have purchased this, they got it in store, and they didn't know that this was going to be a thing. So I guess that gives you a little bit of rebuttal with some of that for some of the items that you have purchased so far. So anyways, that is kind of the overall look right now.

I did get a question, a couple of questions actually, about specifically what products are made in Canada for the pool and spa industry. And to be honest, I did some research in this. And when we look at the, you know, I call them the big three of our industry, Hayward, Pentair, I guess Fluidra now.

I was going to say Jandy, but Fluidra. When you look at those products, there's, I might say this product, or this brand name wrong, but Move, which is M-O-O-V. We do not carry this right now.

But they actually have a manufacturing facility in Quebec. So they are located in Quebec. I know Sanimark, they're obviously Canadian for chemicals.

And outside of that, what I would say is because there's such a vast amount of products in the pool and spa industry. And as you know, a lot of them do come from China, come from overseas, come from the States, right? There's really not too many that actually are made right here in Canada. Highbury Pools, we get our steel from Hamilton.

We build the walls in just outside of London, Ontario. So at no point is that going over the States and coming back. It's all Canadian made.

We're also 100% Canadian owned and operated. So it's kind of like, you know, the old school mom and pop thing. It's not a big, giant, publicly traded company.

It's just, it's a family run business, right? And on top of that, like I said, our vinyl, most of it's from CGT. There are a few patterns that we get out of the States. But other than that, we support Canada as much as we can.

Now, we have also been largely a Hayward dealer for years, ever since I've started with Highbury. And so making that transition is obviously not the easiest thing. So for that, we still are doing our regular, using our regular suppliers.

But, you know, like I said, we already have purchased a large amount of stock in our early buys to supply our dealers in the coming year. So any funkiness that goes on throughout the rest of the year, I don't know about once we get to say the fall, there might be some changes depending on, you know, what our stock looks like. But yeah, for the most part, we're all set.

Also, I got to mention HPI Hinspurgers. That's where we get our safety covers from right out of Toro, Nova Scotia. So yeah, we try to support Canada as much as possible.

And for finding out if the products that you carry to find out if they are made in Canada, though I couldn't, I don't have time really to go through item by item, item by item, right? The best thing to do that I've found so far is if you go on Google and you enter in, I actually posted this on my Facebook just before I started recording this. If you go on Google and you start typing in, where are blank, where is blank manufactured? And you can enter in a company name, a product name. And the Google has this built in AI overview feature, which I would assume is based off of Google Gemini.

And I've had it where like, it'll pop up, this is made in the US or this is made, some items are built in Italy, in the US, they might list specific states. And then, you know, Matty Mac, they're made in Australia, right? Same with, what is it? Spa Electric, they make the atom lights that we carry, they're built in Australia as well. And so, it's actually been really helpful to determine like where things are actually built.

And so, though I couldn't go over the vast amount of products that are in the industry, I can give you a tool. And that tool is Google, specifically Google Search. So, the AI overview tells you, this is where that is built.

And I invite you to actually do that and see what pops up. Type in, where is Highbury Pools manufactured? And it will pop up. So, that's everything I got for you so far.

And obviously, if there's any changes that come up, I'll be sure to let you know. Now, outside of this, for the rest of the podcast, where do we go from here? I think for the next little while, I'm going to be doing some updates. I want to also get some guests on as well.

But as you may or may not know, my wife and I, we bought a house at the end of the year, moved into it, did some renovations. We're actually still unpacking, believe it or not, just because we've been doing so much work. And we are also expecting our first child in a couple months.

So, that's why we've been really focused on getting this done. Obviously, we got the pool season coming up as well. So, want to get everything done out of the way, so we can deliver this year.

So, I appreciate everyone who has stuck around, supported the podcast so far. And don't worry, there will be more episodes. And I will have more guests.

And it'll be a great time, a fun time. And I will say that this is the first podcast I've recorded, not only in this house, but with my new little, cat's going up the scratch pad here, with my headphones. So, hopefully this recorded all right.

I'm not using my usual mic right now or my usual camera, but I wanted to test it out. So, new house, new gear, and let's see how it goes. Anyways, thanks again for tuning in to another episode of the Promo Minds Podcast.

I'm your host, Steve Leslie. And until next time, take care.