On February 1, President Donald Trump signed an executive order implementing a new 25% tariff on imports from Canada and Mexico, along with an additional 10% tariff on imports from China. Energy resources from Canada will be subject to a lower 10% tariff. 

According to the Trump administration, this action is intended to hold Mexico, Canada, and China accountable for their promises of halting illegal immigration and stopping fentanyl and other drugs from flowing to the United States. 

“Tariffs are a powerful, proven source of leverage for protecting the national interest,” a White House press release stated. “President Trump is using the tools at hand and taking decisive action that puts Americans’ safety and our national security first.” 

But what does this mean for the HVAC industry? 

HVAC system prices have been steadily increasing over the past few years. Among the multiple reasons for the surge are rising costs of raw materials, persistent supply chain issues, strong consumer demand, and higher operating costs for manufacturers. Also, regulations from federal departments — such as the Department of Energy’s updated minimum energy efficiency standards and the Environmental Protection Agency’s AIM Act — have also contributed to the increased cost of equipment. 

The substantial price increases in HVAC equipment over the past few years have made affordability a growing concern for consumers and HVAC contractors. Industry leaders are already seeing 2025 as more of a repair versus replacement market, and higher pricing could only enhance that trend. 

If these tariffs are here to stay, the expectation is the costs of raw materials and any supply chain issues could increase. Major HVAC manufacturers such as Carrier, Daikin, Lennox, and Trane have manufacturing facilities in Mexico while also receiving components from China — not to mention that some overseas HVAC companies manufacture products exclusively in China. 

In a recent Trane earnings call transcript, which took place before the tariffs were announced, the company stated that “potential tariff impacts could affect cost structures and profitability.” 

The Heating, Refrigeration and Air Conditioning Institute of Canada (HRAI) held a press conference expressing concern about a potential trade war. Their members include manufacturers, distributors, and contractors in the HVAC industry. 

“We urge the government of Canada to negotiate vigorously and creatively to avert incoming U.S. tariffs,” said Martin Luymes, vice president, government, and stakeholder relations for HRAI. “However, if regulatory measures are contemplated, we urge the government of Canada to exempt the products of our sector due to their essential nature.” 

In a recent survey of HRAI members, over 70% expressed serious concern about the prospects of U.S. tariffs, and more than half of them anticipated a need to take drastic measures including production slowdowns and hiring freezes. 

According to President Trump, the tariff “will remain in effect until such times as drugs, in particular fentanyl, and all illegal aliens stop this invasion of our country.” 

This is now the second major tariff decision in the past year that has affected the HVAC industry. In September, the Biden administration raised tariffs on steel and aluminum products from China, including heat exchangers.