Why your next house (and car) are at the mercy of Washington | Can Canada survive the new trade war?

Hinzugefügt: 2026-05-31

[00:00:00]Two into standing order 1082 in the motion adopted by the committee on Thursday, September 18th. The committee is continuing its study of Canada in the forthcoming Koosma review. We have with us today the Canadian Homebuilders Association, Kevin Lee, chief executive officer, and from the Pacific Manufacturing Association of Canada, Brendan Sweeney, President and Chief Executive Officer. Welcome to both of you. Thank you for taking the time to come and speak to the committee today on uh what is of course really important as we continue to do a review of the koozma and uh move forward. So I will turn the floor over to Mr. Lee for five minutes, please.

[00:00:44]>> Great. Thank you. Thanks a lot for having me today. Uh, the Canadian Homebuilders Association or CHBA represents over 8,500 member firms across the country representing builders, developers, renovators, trade contractors, and all the support, services, and suppliers that make up the residential construction industry. Our members build low-rise, mid-rise, and high-rise homes both for ownership and for rent. Uh, as you know, Canada is in a housing supply and affordability crisis. Uh CHBA's housing market index, a leading industry sentiment indicator, shows that for Q1 of 2026, we're at near record low builder confidence in the single family market and a new record low in the multifamily market, signaling fewer housing starts ahead for home ownership. In studying the forthcoming KUSMA review, it is therefore critical that the impact on housing be top of mind. Uh the sector continues to deal with many challenges including high taxes, overly restrictive mortgage rules, labor shortages, high material costs, municipal process delays, and other barriers that are resulting in not enough homes being built. And these challenges are directly related to affordability issues impacting Canadians who wish to own a home. But added to these are the challenges of the big issue of diminished consumer confidence, very much driven by the uncertainty over trade and tariffs with the United States. CHBA's number one recommendation on the trade war has always been to avoid Canadian retaliatory tariffs on construction materials. Uh where counter tariffs are deemed necessary, CHBA has advised the government to look to product categories where there is ample supply within Canada or from other countries. Uh during the koozma negotiation, CHB advises that any final agreement um make sure it doesn't exacerbate any ongoing house housing affordability issues in Canada or result in long-term actions that will negatively affect businesses and consumers where housing and home ownership is concerned.

[00:02:42]Home construction is deeply connected to North American trade and supply chains very significantly depending on the region in Canada. In many cases, the flow of trade north south for some products has been more prevalent than east west. For example, distributors in Alberta source their drywall from completely different manufacturers than those in Ontario. Kousma is designed to reduce trade barriers effectively allowing buy or make options which has resulted in efficient and effective distribution chains previously including specializations in plants north and south of the border. So any changes to trade rules, whether through tariffs, rules of origin, or administrative requirements, will have a direct and immediate impact on housing costs and timelines. Trade tensions and tariffs are already contributing to economic uncertainty to already higher input costs. CHB's Q1 HMI survey found that material costs on a typical 2500 square foot detached home have increased by $110,000 since the start of 2020. um including labor statistics Canada scanner reports that builder costs have ri risen by 70% over this same period thanks to koozma thus far these prices have not been driven up further and so those increases are really not driven by the trade tariffs at this stage so it could be much worse um when the government was considering phase 2 tariffs analysis found that those tariffs would have been far more comprehensive in increasing the cost of construction Canada's home building industry is particularly exposed osed in relying on imports of construction machinery, appliances, HVAC systems, electrical components, plastics like PVC, windows and doors, glass as well as metal and wood windows and doors are identified as large vulnerabilities across the country and CHBA supported a successful remission request on window and door imports relative to the steel tariffs given the exposure in these product categories. Given the housing affordability and supply crisis, CHB implores you to recommend to the government to maintain stability and predictability wherever possible.

[00:04:44]Securing an extension of KSMA with a minimal disruption should of course be top priority for the government.

[00:04:49]Stability supports investments, protects jobs, and ensures that housing projects move forward without unnecessary risk.

[00:04:55]CHB also recommends avoiding tariffs on construction inputs should KSMA start to fail. uh during the current trade war, CHBA has consulted with government to avoid applying retaliatory tariffs on building materials where countermeasures are necessary. They should be carefully targeted to avoid products that are essential to residential construction and where alternative supply is limited.

[00:05:17]As I mentioned previously, overall trade decisions made in this review will directly affect the cost of housing in Canada and the United States for that matter. and we encourage the government to explicitly consider housing affordability in its negotiations to assess how any proposed changes would affect building costs and supply. Thanks and I look forward to your questions.

[00:05:36]>> Thank you, Mr. Lee. On to Mr. Sweeney.

[00:05:40]>> Good afternoon. My name is Brendan Sweeney and I'm the president and CEO of the Pacific Manufacturing Association of Canada or PAMAC.

[00:05:50]PAMAC represents the two largest automotive manufacturers in Canada, Honda and Toyota.

[00:05:58]Thank you for inviting me to contribute to this important study on trade with the United States.

[00:06:05]The tariffree trade of vehicles with the United States is vital to the competitiveness of PMAC's members. As such, PAMAC and its members are urgently seeking one, the elimination of section 232 tariffs and two, the renewal of KUSMA. Doing so helps ensure the viability of PMAC members operations in Canada. In 2025, PMAC members Honda and Toyota assembled more than 938,000 vehicles in Canada. This represents 77% of Canada's total vehicle production.

[00:06:47]A majority of the vehicles made in Canada by PMAC members today are hybrid electric.

[00:06:54]They're electrified. They're hybrid electric.

[00:06:58]Approximately 85% are exported to the United States.

[00:07:03]Virtually all the remainder are sold in Canada. At the moment, there are no other viable markets for vehicles made in Canada that could replace the volume of our members exports to the United States.

[00:07:19]PAMAC members represent more than 60% of active vehicle assembly plant employees in Canada.

[00:07:26]PAMAC members have never laid off assembly plant workers in Canada. They operate alongside a Canadian network of more than 40 Japanese tier 1 automotive parts manufacturers that supply our members primarily or exclusively. These suppliers employ more than 20,000 people in Canada or about 30% of Canada's active automotive parts manufacturing workforce.

[00:07:52]PAMAC members assemble more vehicles in Canada than they sell in Canada. In 2025, that ratio was nearly 3:1.

[00:08:03]They do so because of competitive advantages when compared to US-based assembly plants that assemble similar vehicles.

[00:08:11]These competitive advantages are the results of several factors, including higher quality and the productivity of the workforce in Canada and the efficient and integrated trade networks facilitated by agreements such as KUSMA.

[00:08:29]Those competitive advantages have eroded since April of 2025.

[00:08:33]This is a direct result of section 232 tariffs imposed by the United States which has emphatically stated its intention to reshore vehicle production.

[00:08:46]Irritants such as import quotas offered to non-market actors and environmental policies that are not aligned with the types of vehicles manufactured in Canada have further eroded competitiveness or risk doing so. If section 232 tariffs remain, those competitive advantages will erode further. If KUSMA is not renewed, they will erode further. Still, while the near-term future of PAX PMAC members Canadian assembly plants is not in question, their long-term viability is at risk if section 232 tariffs are not eliminated and if KUSA is not renewed. Conversely, if section 232 tariffs are eliminated and if renewed or updated KUSMA terms are favorable, PAMAC members can reestablish competitive advantages which will support our members long-term commitments to Canada and the communities in which they operate. PAMAC members are committed to Canada, continue to operate assembly plants at full capacity or above full capacity and have not engaged in layoffs. We hope to see that commitment reciprocated through swift and meaningful action on section 232 tariffs and on KOSMA. Thank you.

[00:10:01]Thank you very much Mr. Sweeney. On to Mr. Mantle for six minutes please.

[00:10:08]>> Uh thank you Mr. Lee, Mr. Sweeney for being here. Appreciate your valuable testimony on on your industries. I'll start with you Mr. Sweeney uh with respect to automotives. Uh last year the Japanese ambassador to Canada said that access to the US market through USMC and KUSMA was essential his word uh to both current and future investment uh by Japanese companies. And in that same year last year, Mr. Templan, Toyota's executive VP, uh said that US tariffs on Canadian autos were quote unsustainable.

[00:10:40]Are both those things true today as they were in 2025?

[00:10:45]IMAC members build where they sell and that's North America. Uh we assemble vehicles in Canada. About 85% of those go to the United States. Virtually all of the remainder stay in Canada.

[00:11:00]This is a result of a a competitive manufacturing ecosystem based on integration with the United States.

[00:11:07]That's why PAMAC members are here and that's why they can establish these large-scale operations and these you know positive 3 to1 2.6 to1 2.8 to1 production to sales ratios there may be incremental opportunities in markets outside the United States and outside of Canada. Um but the real opportunities are in the United States and to you know the extent of the size of the Canadian market in Canada but access to the United States is essential. So is it fair to say that uh if the government fails to secure some sort of resolution to 232s or is unable uh to get a favorable outcome on rules of origin which may be changed uh what will happen uh to the PAC members Toyota and Honda in Canada? Do they have any reason to continue building vehicles in Canada without access to the US market?

[00:12:12]>> For the foreseeable future, the plants are running and they're running at capacity.

[00:12:18]These types of decisions get made seven, eight, nine, 10 years out. Um, and anything that changes the competitiveness and that that competitive calculus is going to change decisions that are made. many of some are made in Canada, many of which are not. Uh and so that's why in this case, I mean, we really just want to see a laser focus on section 232 tariffs moving forward.

[00:12:52]>> So, in that vein of long-term investment, >> did Honda decide to suspend its investments in Canada because Canada no longer has that tariff-free access to the United States?

[00:13:05]No, I I don't want to conflate that to 232 and the Honda investment because you know today Honda's plants are running at capacity. Uh and you know there were different reasons related to the market and again that Honda at capacity no layoffs and that's the case for the foreseeable future. Um, what I think is important is that section 232 tariffs can affect the competitiveness of PMAC members in Canada and that should be the focus, the primary focus moving forward.

[00:13:43]>> Are you are you happy with the government's progress to date on that issue for your industry? I I could not tell you one way or another what the I'm not privy to what progress is being made in in Washington DC or by >> so so the government isn't informing your members of their progress on this issue which is critical for your industry.

[00:14:03]>> Well, we're we're we're having conversations but I imagine there are conversations happening that >> but you can't I've been at I've been at it for a month. Yeah. So >> Mr. Lee, just a couple questions for you on housing. um from a generation that can't afford to buy homes. Uh it's been like that for a few years. It's only getting worse. Uh it seems despite assurances to the contrary. We we've proposed a few ideas that we uh in the opposition that we hope might spur some of that. I just want to put them to you and give me your thoughts on whether you think this would help the situation or not. We've proposed to cut the GST on all new homes uh up to 1.3 million, which we think will save about 65,000 for a family. Good idea or not? Yeah, absolutely. And definitely something we've been asking for as well.

[00:14:49]>> Um, second idea we've proposed was to tie federal infrastructure funding municipally to home building and require municipalities to permit additional um home building development each year.

[00:15:02]What do you think of that?

[00:15:03]>> Yeah, that's that's also really important and and something um the current government has started and something we've been advocating for for quite some time. and the federal government doesn't have direct access in many cases to these issues, but by using the levers that they have through investment, they they can make a big difference and and so those kinds of recommendations are exactly the type of thing we'd like to see continue to move forward.

[00:15:25]>> Thanks. And in the last few seconds I have, I just want to give you the opportunity. What do you what do you say to people Canadians of of my generation who are trying to get into the housing market, trying to work hard, save their money, um buy a home, start a family.

[00:15:40]What's their message to them as a as the home building association?

[00:15:43]>> Well, number one is still a great goal.

[00:15:46]Uh continue to pursue it. Um but also use your use your voting capabilities at all three levels of government. Um, all three levels of government have a role to play in making housing more affordable and more accessible. And probably the place that Canadians uh focus the least that but that has the most impact is actually municipally especially for young Canadians looking for new types of housing, new forms of housing um where there's a lot of um municipal things that that get in the way from zoning to bylaws to nimism to anti-infill all of those things. So um yeah, don't don't give up on the dream, keep pursuing it, but uh be be loud and active as well. Thank you very much, Mr. Aliasi, please.

[00:16:27]>> Uh, thank you, Madam Chair. Thank you, Mr. Sweeney. Thank you, Mr. Lee. Um, your testimony has been very, uh, helpful. Uh, allow me to start off with, uh, Mr. Sweeney. Um, as I understand it, um, uh, your membership and and, uh, indeed your organization, PAMAC have been consulted on, uh, Kousma on, uh, on numerous occasions because we value the insights that you bring. Uh, is that correct that, uh, you have been in touch with the government, uh, on various occasions? Excellent. Um, and would it be accurate to say that that the government appreciates full well uh the concern with section 232 uh tariffs as well? Would that be your assessment?

[00:17:13]>> Uh, you'd be in a better position to assess that than I am.

[00:17:16]>> No, but what is your sense of it? I mean, did they ever give you the impression that uh that we're not um focused on that issue?

[00:17:23]>> We've had some great conversations.

[00:17:27]So um just wanted to confirm that you know those discussions are taking place um and uh you recognize full well that the government is focused on this.

[00:17:36]>> Um Mr. Lee uh has the government been in touch with uh your organization as well?

[00:17:42]>> Yes.

[00:17:43]>> As we uh approach Excellent. Um now uh you spoke to the fact that um our supply chains are very integrated uh and how KUSMA is bound to have an impact on housing prices in Canada and vice versa. Uh as well I was looking at some uh stats um housing prices are up considerably in the US. Uh they're saying nationally 2%. in particular in the northeast I believe. Um and those prices are up in 40 states, 40 out of the 50 uh in the states. Uh so given how integrated these supply chains are uh how detrimental is it to the US housing market as well should they continue to maintain these tariffs?

[00:18:34]>> Yeah, it's it's hugely problematic. Um and the biggest thing that affects the US market is the uh tariffs on on softwood lumber and that ongoing dispute. They're so reliant on on what we do in terms of exporting what is actually not only a lot of lumber but very high quality lumber and in fact the the quality you you'll hear a lot about um yellow pine from the the south of the United States and it's actually very much an inferior product as well. So, not only are they getting some they're they're paying more across the board because when they tariff Canadian lumber, that just means all the US lumber mills increase their prices and you see those higher prices across the board, but they're also seeing an inferior quality product as well, which um is is problematic for them in in a variety of ways. And then on top of that, you can add, you know, lots lots of other products that that we produce and and ship south of the border. But there's no question lumber is the number one issue facing them when it comes to Canadian uh imports for them to the US.

[00:19:29]>> Well, thank you so much for fleshing it out as to how uh significant lumber is.

[00:19:35]Uh what would be uh the other inputs uh that we export to the US and are uh critical to the health of the housing industry? Yeah, it would be things like um beyond beyond lumber, we have a variety of uh steel and aluminum products um that are obviously also seeing very heavy duties right now. Um, the other thing is we have a lot of products that go back and forth across the border through the manufacturing process and sometimes those get lost in the weeds and you're you're paying multiple duties back and forth um on on assembly of different products including HVAC and and others. Um, so those those are those are the the big ones. We we see some drywall go back uh over to the United States. Um, we have quite a bit of production in Canada, although it mostly services the uh the Canadian industry. Um, so those would be some.

[00:20:30]>> Thank you so much. Now, if I could uh return to you, Mr. Sweeney. Um, I've had the privilege and the honor of uh visiting Honda uh and they do an exceptional job. Same is true uh for Toyota. Um and um and we're so incredibly grateful that there has been no downturn in uh in production. uh you touched on the issue of uh competitiveness and uh in particular you underscored the significance of uh the Canadian workforce. Uh just so we're all familiar with the incredible uh things that uh Honda and Toyota do here. Uh could you uh give us some of the awards that each of them have have u have secured uh in the past several years because it really is a point of pride.

[00:21:20]>> Sure. very grateful for uh the amazing work they do.

[00:21:23]>> Yeah. So there are uh JD Power is an automotive organization in the United States and it awards uh four different levels uh platinum, gold, silver, bronze for initial plant quality and in every year since I can remember since I've been working in the automotive industry which is 15 odd years now at least one Honda or Toyota plant in Canada has won one of these awards. uh sometimes two plants, sometimes both companies are winning awards. These are the only plants in Canada that have won these awards since 2013. And I believe that one of Toyota's two plants in Cambridge, Ontario is the most awarded plant for initial plant quality by JD Power uh in North America. And if it's not the most awarded plant in the world, it's very close to it.

[00:22:20]Thank you very much uh Mr. Sassi and Mr. Sevar Trombble for six minutes.

[00:22:29]>> Thank you madam chair and thank you to you for being here and for your evidence. First question is for Mr. Sweeney. What do you think of this uh idea that was fashionable at some point of a common North American tariff on vehicles that would be coming from China?

[00:22:48]really explored that idea that at this point in time.

[00:22:55]>> We also received uh or welcomed the uh um Canadian uh automobile makers uh that work internationally. They said that the sunset clause was harmful to them. Uh the sunset one clause in was harmful to them. Do you have anything to say about that?

[00:23:24]>> That would jeopardize the the long-term future of Koozma is unwelcome. Uh we are are here to work in an integrated North American automotive industry, an integrated market and KUSMA facilitates that. Uh so renewing koozma a long-term renewal that's what we favor >> also received the former bargaining uh Steve Fhole who wrote worked with Kuzma six years ago we also saw him before but we uh signed it that he came to see us in October 2025 he's no longer working for the Canadian government so his evidence was a freer than he might have said. So he was uh feared that they US would impose minimal uh requirements for American contact in uh manufacturing of cars. Have you heard about that in the form of rumors? There was nothing more official, more serious.

[00:24:42]So >> so we know that there are several experts who appeared here who told us that they expect that the US will be using the possibility of a uh annual review to uh always uh get uh concessions from us by using that sunset clause. Is that something that you fear?

[00:25:06]And if that's a fear is wood uh at the head of the list of uh pressures and how could we avoid this?

[00:25:15]>> Certainly it's a big problem when you don't have certainty in cost, right? And so when there's and and that will affect uh multi-unit construction even more so than sort of low-rise single family construction just because the buildout is that much longer. So you you're creating all kinds of uncertainty in that phase if you're in any kind of well we're going to renew this every single year by by the time you're actually building the prices might be completely different than what you you know sold the original home at. So um you know and that's for any industry it's going to be problematic. Uh but for housing in particular for uh for projects going to take more than one or two years to build it would be it would be a huge issue. So anything we can do to create long-term certainty is is of course very welcome.

[00:26:01]I know that you're collaborating with the National Homebuilders Association, which is one that's the most uh uh the organization that opposes tariffs the most in the US. We even heard them uh in Biden's time. So, we had a mission either with this committee or with the Canada US Parliamentary Association. I can't remember which. We met them and they said, "We're trying we're really trying to make Americans aware that tariffs uh are something that they will be having to pay for in a context of a housing crisis. It's not the right moment to be doing this. Are there uh joint uh representations uh coordinated efforts by these associations to uh speak to the American government uh in the context of the KSMA review and uh also talking about softwood >> and that that's been to your point and it's been an ongoing issue for the National Association of Home Builders in the United States because further to my commentary earlier the the tariffs on softwood lumber are a major issue. for construction costs south of the border.

[00:27:11]Um, so that's been an ongoing effort.

[00:27:13]There were sever several organizations uh in the United States pushing back against all of these different tariffs because even even Canadians initially when the tariffs started didn't understand that US tariffs on Canadian goods affect the price of American goods and in our case American houses, not not Canadian houses, right? It's the counter tariffs coming our way that are problematic. And but 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. And that that makes it very difficult for people to make the decisions to buy houses here in in Canada.

[00:27:54]Quickly, we know the bi-American policy and I know that there's a desire to create by canadian and the Canadian government would like to include steel and wood more in uh building. Do you uh think that uh favorable or is it uh the basis of uh negotiation to say we respond to a certain policy by putting out a similar policy?

[00:28:22]I mean we can all we can all agree to that. Um the challenge is when you're talking about integrated supply chains and we can use steel as an example. We have steel mills on both sides of the border that are very close to each other. Um but they specialize in different types different types of beams. One one a Canadian plant will do one kind of beam and the American plant will do a different kind of beam. Um and so retooling everything is very very expensive and not necessarily efficient because you don't get the same kind of efficiencies of scale and volume. So there's no question that reestablishing Kisma and having that kind of certainty there's a reason why that has been done over the years. It creates certainty it creates efficiencies. it creates lower prices. You know, if if on the long term we're not able to get that certainty from the United States, then there's going to have to be different types of investments. Um, and there's going to be a certain amount of investment in Canada, but also the number one reaction really to what's going on with the United States is also who else can produce and compete because it's not natural to try and do everything domestically. It's not efficient. It's not effective. Um, your way free trade has had a good impact on most of the world and raising cost of living. So, um, it's a very unfortunate situation to make the understatement of the year on what's going on with the United States, but the the solution is to try and fix what we have andor work with other partners because just trying to do everything domestically would would not be efficient and effective. There's only so far we could go with that. That would actually make sense from an economic perspective.

[00:29:46]>> Thank you very much, Mr. McKenzie, for five minutes.

[00:29:49]>> Thank you, Madam Chair. Uh, Mr. Lee, I' I'd like to pick up right there. I have to presume that uh in your role on behalf of your members uh you have conversations with your counterparties in the United States and I have to presume that they are ex um uh expressing the same degree of uh consternation and uh concern about the turbulent times that we're in from a trade perspective. Is that accurate? Are they hurting in the same manner that that our industries are?

[00:30:17]>> They are and as I said around lumber and and increased uh prices. What I will say is is working in the in their favor a little bit um is less regulation and it's something that we talk about here in Canada around around housing and home construction and and the need to look at things like the building code, look at things especially 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. Um, so getting much smarter about regulation and streamlining, not abandoning regulation, but being much smarter about how we do things so that we can get things done much more effectively. Um, they've always been a little bit better at that in in the United States and they're taking a more aggressive stance on some of those things. So, they're super concerned to your original question about increased prices and tariffs and all of the rest.

[00:31:08]Um, but they're also pleased to see a bit more movement on deregulation, which we probably all need to follow.

[00:31:13]Australia has p paused building code changes for example for the next five years something we should do as well.

[00:31:19]>> Uh indeed and that's an entire entirely additional uh subject area what we can do in Canada uh things over which we have complete control at this point in time which is not the case with uh our international agreements. Um I want to ask you uh about a specific aspect of the building industry and that is prefabricated or modular homes. Um to my understanding that remains a very small percentage of the Canadian and residential market primarily uh in the single digits. Is that accurate? Can you explain a little bit about what happens in that market share of the marketplace for us?

[00:31:53]>> Yeah, absolutely it is. Especially when you're talking about 3D modular, it's you know low single digits 3% maybe g give or take. Um we have a lot more of our members using panelized construction and different forms. there's, you know, there's there's factory built and there's factory built. Sometimes it's doing the same thing just, you know, in enclosed conditions. Sometimes it uses more automation. Um, and there is an opportunity to make much more use of it.

[00:32:19]The reason why we haven't gone that route though in Canada and by the way, United States and Australia, three very similar countries when it comes to home construction practices, is because of the boom bus nature of the housing market and productivity, which is sort of misunderstood in residential construction. I won't get into that right now in a couple minutes, but basically we do run assembly lines.

[00:32:41]They're just in a house. And so the trades run through the house and it's actually really efficient. But 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 um companies go bankrupt when things slow down. And so that's the main obstacle that we've had in the Western world, frankly, in most countries. There are some countries that went heavy automated through government investment over time.

[00:33:05]Um, but there are some companies that countries have been trying recently like a um like Ireland that put a bunch of money into it and actually those companies are actually failing. So, I'm not saying we shouldn't go that route.

[00:33:15]We have a modular construction council within our association. We have a sector transition strategy on how to move there. Um, but it's not as easy as well, it's just faster, let's do it. And by the way, I should also add it's not cheaper and our factories will tell you this. There's 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.

[00:33:38]Um, but our our big challenge is trades and not enough workers and that's why we do believe we need to move to much more factory built moving forward. But there are other barriers that might not be obvious sometimes. So um clearly if uh I wanted to build say uh 500,000 homes a year uh pre-fabricated and and modular is not a a magic panacea to achieving that. But you you I think and correct me if I'm wrong on that. But you've also touched on something else that I think is quite important. If I wanted to build 500 additional housing units per year, do we have the labor capacity in Canada right now to do that?

[00:34:17]>> Uh we definitely do not. uh which is not to take away from the idea of doubling housing starts. That's a really important target. We definitely do not.

[00:34:25]Um more importantly, there are so many things in the way of getting there, including housing affordability, including regulation, including code interpretations that are different between different municipalities and even between different building officials. So, we there's so many things in the way of doing things at speed and with affordability. Labor isn't our number one issue. Um if the market was better, labor would be close to our number one issue. Um, and that's another reason why factory built will be so important. So to your point, there is no silver 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 the things to correct it to move forward.

[00:35:02]>> So again, if I were to announce that I were 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 us 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 sounds to me like it's years and years down the road.

[00:35:22]>> Brief answer, Mr. Lee.

[00:35:23]>> Sure. It is going to take years. We have to start the steps now in a bunch of different ways. Some have started, more need to be done and then we can get there.

[00:35:31]>> Thank you very much, Mr. Navki, please.

[00:35:34]>> Thank you very much uh to both of you for for coming um and sharing your thoughts on on this really important topic. I think it's it's it's very clear that the the the the challenges that um we are all facing visa v United States and the your respective industries is it's not the making of Canada uh has been thrust upon us. Um we know that NAFTA and then subsequently KSMA are really wellthoughtout agreements. They are model agreements that worked really well for the benefit of not only just Canada but for the United States and for Mexico as as well.

[00:36:13]I say that from my own experience as a as a trade lawyer in in the past where other countries looked at NAFTA at that time as a treaty that they wanted to to replicate uh in terms of the impact on the economies the the integrated supply chains the resiliency in the supply chains that's that's built. So here here we are find ourselves in this in this juncture and of course it the task on us is to get the best deal for Canada and Canadian industries. Um nothing less in my opinion should suffice. Uh and so we cannot rush oursel into into into a place where an agreement that is not beneficial to the sectors to the industries that you're talking about. So what I would like to hear uh from you is your suggestions or recommendations if you were advising the government of Canada in these um in these very um challenging negotiations and conversations. What what position would you take? What would you suggest uh overall but more particularly from the perspective of your particular industries as to the the position of Stan Canada Canadian government should be taking? Start with Mr. Lee and then Mr. Well, I think there's there's no question that if we could just keep going with KUSma as is. To your point, it's an excellent agreement. It is has kept uh you know, the tariffs way down on most materials. I mean, as I said earlier, the fact that we're able to continue right now with limited impact on on the price of construction given all of the trade war that is going on is is a testament to how well KZMA has been structured, at least for for our industry. Um, so that's that's definitely the objective I think and and I would I would concur um that we can't rush into anything for the purposes of solving a problem um that is really a bad deal for Canada, especially given that we shall see whatever agreement comes with Kisma how permanent that actually is given the nature of what's been going on with negotiations with the United States and and ongoing volatility.

[00:38:27]So I would suggest it's going to be critical that we do do everything we can to get the proper deal and something as close as possible to the current arrangement would would be ideal. And I guess I would add to that those are the types of deals that we need to continue to expand on with the rest of the world too given the uncertainty that we see south of the border. Um to my point earlier we can make more stuff in Canada but it doesn't make sense to try and make everything in Canada. So having strong trade relations with the rest of the world is going to be doubly important in these times.

[00:39:02]>> Stay focused.

[00:39:05]>> Uh communicate the value of uh an integrated North American economy persistently and relentlessly to both friends and others south of the border and a avoid distractions wherever possible.

[00:39:23]Thank you. The um the last point is is really important is the distraction part because there are a lot of distractions uh on a regular basis unfortunately. So I think the focus and and discipline is is is imperative in these in these negotiations and I think that's precisely what Kenyan government is doing. Mr. members are two very large auto manufacturers in the world. Honda and and Toyota and obviously they export directly from Japan as well to United States and um and through Canada uh and other parts of of the world.

[00:39:57]Are you able to share with us their attitude towards the stability of any agreement that's reached? Mr. Lee alluded to that sometimes there are some doubts as to agreement signed is really worth the papers written on and there has been some back and forth visa v Japan uh as well what's the understanding is from from your members in that regards and again advice to Canada as to how do we make sure that whatever deal we do land is in fact permanent and stays uh as such. So, just for clarity, I I represent uh Honda and Toyota's Canadian interests uh not their interests in Japan.

[00:40:42]And I think that our members in Canada um would put some trust into a freely negotiated or renewed KUSMA uh if it were if if we achieved that.

[00:40:57]>> Thank you very much. Uh on to Mr. Sear Trombble for two and a half minutes.

[00:41:04]Thank you, Madam Chair. Mr. Sweeney, could you tell me specifically about the uh case of aluminum? several people uh who were witnesses here uh told us because we know it's an important uh element that and the aluminum association of Canada uh gave filed a brief that says the uh follow-up measures in Mexico were not sufficient that it didn't uh allow uh the uh true provenence to be there. There was dumping probably from China and uh India the two main guilty parties. Did you look at this >> speak on behalf of our members in the automotive industry today? Uh I agree with you that aluminum is important and I'm not the right person to speak about aluminum.

[00:41:57]So your members have never brought up the issue of dumping which would be a way around the American standards on aluminum and the um you it sounds like you've heard from the aluminum association and they are much better equipped than I am to to speak about that issue.

[00:42:27]I'm surprised that your members are so how much time do I have left madam chair before uh asking well Mr. There is recent data that show an important increase of imports. 47% of uh wooden floors, 36% for cupboards.

[00:42:48]According to members of the industry, it's a pressure that's explained by American tariffs that contribute to to redirect the Canadian market uh towards the Canadian market. major volumes of uh foreign products that were initially meant for the US and other Chinese products there in large part. Did you observe this as well?

[00:43:13]>> Seeing a bit of a switch over in in supply chains and and distribution um as as Canadian companies look to find uh you know cheap cheaper alternatives and and something that's uh more more secure. Uh so we are seeing some of this and and you know where you can do it at uh at a reasonable price that's not impacting affordability and still have the good quality is it does provide a little bit more security. So that diversification could be something that serves us well over the longer term.

[00:43:43]>> Thank you very much Mr. Chambers for five minutes please.

[00:43:48]>> Thank you Madam Chair. Uh Mr. Sweeney welcome uh to committee. Congratulations on your appointment in your role. think it's a a good idea to have a a voice, a coordinated voice in these discussions uh and uh valuable contributions to the discussion today.

[00:44:06]>> Did I hear you correctly in your opening statement?

[00:44:10]You said that and just play back to you.

[00:44:13]I I believe you said it's access to the US is essential uh to the viability of the auto sector in Canada. Is that is that correct?

[00:44:28]>> At at the scale at which it's operating today? Yes.

[00:44:31]>> So is the reverse true? without access to the US market. Uh that puts at risk the sustainability and viability of the auto made the automobile manufacturing sector in Canada as it currently stands.

[00:44:52]>> Uh for our members it would change the competitive calculus considerably and probably not in the right direction.

[00:44:59]>> Right. And to your knowledge are your members well currently you've suggested that 85% of their production goes to the US and and the vast majority of the remaining like high 90% stay in Canada like we don't produce vehicle your members do not produce vehicles today that are sent around the world outside of Canada other than the United States. the there are a small number of vehicles that are exported to uh Africa to Mexico and that but let's just call it 99% right >> of what is made by Honda >> and by Toyota in Canada today uh go to the United States or Canada >> right so let's just just take Honda as an example >> um yeah how many vehicles they produce a year >> hundreds of thousands of vehicles >> more than 400,000 >> 400 some in any given year between 400 and 430,000.

[00:46:03]>> Yeah. And uh 85% of those go to the US and the rest basically stay here. So to the extent that there's any vehicles going to other markets other than the US outside of Canada, we're talking about like hundreds or maybe like a couple thousand at most. Okay. Just wanted to make sure that that was clear. We have yet to hear any evidence or suggestion from any automaker that that other global markets are a realistic option for them. Um despite the fact the government seems to believe that that that is an option for for the sector.

[00:46:43]the of the 48 billion dollar in vehicle exports. This is just this is straight from the the federal government's own numbers last year. 48 billion odd uh worth of vehicle exports. 45 billion of those exports went to the United States. Captured in that what is not captured in that number is vehicles that are produced in Canada that stay in Canada.

[00:47:09]>> Right. Um, of the three billion that uh rem remaining, you got about 500 million going to Mexico, 500 million going to China, and then the rest is just kind of dribbs here and there, and in those export numbers, I suspect there's also some used vehicles.

[00:47:31]>> Right. Right. Well, thank you very much for that clarification. I I I remain to be, you know, I welcome to be proven wrong on this, but I just don't think the business case exists. Exactly.

[00:47:41]>> It's not a napkin.

[00:47:42]>> Thank you. Um, so just quickly, two final questions if I might. Uh, I understand the government announced a new kind of trade credit system uh a few months ago. You're still waiting for that to be to be released or or to become operational. Is that correct?

[00:47:59]>> Correct.

[00:47:59]>> Okay. Yeah. And I made the mistake yesterday. I think I conflated a couple of them yesterday at at uh at the industry committee, but the government made an announcement. The industry's been asking for it, but you're still waiting for it to be implemented.

[00:48:11]>> Correct.

[00:48:12]>> Okay. And that would be helpful to your industry to have that implemented sooner rather than later.

[00:48:17]>> The the concept that was advanced is in in my opinion a very very good idea, >> right? and we just uh and we've we've made a submission uh to a consultation based on that with our uh with our opinions on it and some kind of technical elements and it would be great if to to hear more about it soon.

[00:48:36]>> Thank you. And just one final question in my last seconds before the chair uh I'd like to be mindful of time.

[00:48:41]>> Um the government wants a a strong electric vehicle market in Canada as I understand. So, is it helpful to allow about a third of that market to be served by Chinese imports into that market or should we not be trying to restrict that production to Canadian manufacturers?

[00:49:02]>> Our members welcome competition and we do well when we compete with other automakers on a level playing field.

[00:49:11]any companies that want to any automakers, doesn't matter where they're from, if they want to come to Canada, invest billions and billions of dollars over decades, hire people, pay them well, bring suppliers in, engage Canadian suppliers.

[00:49:32]If they want to do that and compete on that basis, we welcome that competition as long as it's on a level playing field. and that we compete with our members compete with other automakers in North America on a level playing field and it's worked out well.

[00:49:50]>> Thank you for your valuable contributions to the economy.

[00:49:52]>> Thank you, Mr. Sweeney, Mr. Lavo >> Mercier.

[00:49:58]>> Thank you, Madam Chair and Mack. Thank you to our witnesses uh for being here. We'll uh stay on the same topic. uh I hesitated asking uh Mr. Sweeney the same question but I like what our colleagues have raised and you will probably help me in my thinking.

[00:50:17]So I had the opportunity it to go to Norway last March and you know that in Norway in the past year 100% of the new vehicles sold are electric and I was able to observe uh something and uh today I'm asking you a question it's like in base ball this is a bit of a curve ball but maybe you can help me in my thinking uh about how to interpret all of this in Norway electric cars for example the Chinese ones will uh beat 10% of sales and it's the consumer who decides.

[00:50:55]So I ask people so uh the consumers prefer other cars probably some like yours and I'm not able to uh understand why and I like what you said they have to invest here and uh bring money here.

[00:51:13]I agree with you. contribution is essential to Canada. But in on the point that they let the consumers choose, I'm wondering if that model might be uh usable here. I don't know if you have an idea about this point that might help me in my reflections.

[00:51:33]>> Market for vehicles is is smaller and different than Canada. So I'll just put that out first.

[00:51:41]And consumer choice is good when the companies from which those consumers are purchasing vehicles compete on a level playing field. Uh and that's what um that's the type of competition that we favor.

[00:52:01]>> Thank you for that answer, Mr. Lee. Uh quickly I'm asking you a question because the uh bankers association will be in Ottawa tomorrow. In terms of banks, I know that the government uh had uh measures for uh buyers of first homes and uh GST. Are there banks also do something for builders and residents? Have they modified things over the last two or three years? Did you feel that they were helping you go through this problematic time?

[00:52:32]uh let's say in construction financing from financial institutions other than it's getting more difficult uh it's been getting harder and harder to get construction financing with the volatile markets and increased risk we're finding it's it's been more difficult so it is one of the things that uh that we're asking for there's actually a role we believe for the federal government to support construction financing um and that's doubly true we were speaking earlier on factory built in particular modular construction it's very difficult to get uh financing from banks for uh 3D modular homes because they're not on site and the banks perceive that as as more risk. So, we are looking for more uh construction financing to to support construction.

[00:53:20]>> I'll give my time to my colleague.

[00:53:25]>> Thank you for being here today. What we've discussed has been very interesting. Mr. Lee earlier you said that in terms of construction the three levels of government should be working together. You talked about municipalities. I would like to hear a bit more about that side of things.

[00:53:42]No question that municipalities have a have a huge role in helping or hindering um more more housing. Um the biggest challenge we've faced over the past uh years um have been development charges, development taxes which have gone up 700% um and are worst in our largest cities. you know, when we see taxes to the level of over 30% now, for example, in our cities in Ontario, um, which is just unsustainable. Um, and so we we definitely need to find alternative means to to finance, uh, infrastructure and other amenities that have crept into these development taxes. So, that's a big issue. Um, we also, uh, need to be able to approve things faster. It's become very, very slow in the places where we need the most houses. So, we do a municipal benchmarking study every couple of years. Um, and it's not surprising that the places that uh have the best affordability are are able to approve and permit things much much faster. Uh, where is it where is it the worst in the in the GTA and the lower mainland and BC where we need the most houses but it takes the longest to get anything approved and peritted.

[00:54:48]>> There is there is Montreal. I will say on the province um they actually do development taxes much better. I will say that and it's actually a model that the rest of Canada could benefit from um where things are distributed better across the tax base and we're not using uh you know new home buyers to pay the freight on on everything.

[00:55:11]>> I have an open question for both of you.

[00:55:13]How can Canada reduce its v economic vulnerability while at the same time having a strong North American integration?

[00:55:23]>> Deep answer. Yeah. Yeah. That's a that's a tricky one because the the vulnerability right now is obviously coming from our integrated market and I think we all recognize that it would be better if we could have an integrated market without risk. So I I do think you know reestablishing KSMA and moving forward is going to be critical. Um I do think that more um trade agreements with the rest of the world will also be really important. Um, and then being smart about where can we do better Canadian uh with Canadian companies uh to to have more value add and and help protect ourselves. I think it's it's got to be all three um that we move forward with to to lower risk as much as possible.

[00:56:07]>> Thank you very much. I'm sorry to both of you. U Thank you to our witnesses.

[00:56:12]Very valuable. Who knows? We may have you come back and uh add some additional information. I need some comment back from the committee if you can. Uh on our calendar, we were planning to do a an interim report on what we've heard so far of Koozma but continue to have witnesses. Uh I need to hear some direct. Does the committee want to do an interim report on Koosma or do you want to just continue Mr. Chambers? Um, my position would be instead of an interimm report, I'd rather have another uh meeting with witnesses that we can invite and submit to to come rather than drafting an interimm report which will eventually be uh overtaken by a final report. Anyway, so I think we could use that time more valuably more of a more valuable way.

[00:56:58]>> Mr. Nappy, your comment?

[00:57:00]>> Yeah, we we we concur. I mean, I don't think there's a need for an interim report. Uh perhaps you can get a couple of more witnesses. Okay. So to our analysts, thank you for pulling it together, but uh I think the committee wants to go in that direction. We'll just continue to have witnesses and we'll have a report when we have a final report. All right. Thank you all very much. Thank you, gentlemen. Meeting adjourns.