Tariffs Are Pushing Up Furnace and Heat Pump Costs This Winter

Canadian homeowners replacing a furnace, heat pump or air conditioner this winter are likely to pay more than they would have a year or two ago, and the latest round of the Canada-U.S. trade dispute is a big reason why.

What happened

According to National Post, Ottawa and Washington have been exchanging tariffs over the past year, and the heating, ventilation, air conditioning and refrigeration (HVACR) sector has been caught in the middle. The report says Canada first imposed retaliatory tariffs on U.S.-origin gas furnaces in 2025, and that relief for furnaces specifically was granted in June. But after Washington introduced new Section 338 tariffs on hundreds of Canadian imports in August, Ottawa responded with a broader set of retaliatory tariffs that now cover air conditioners, heat pumps, refrigeration components and other HVACR parts, at rates National Post reports range from 15 to 50 per cent.

Because Canada imports more HVACR equipment from the U.S. than it sends south, industry representatives quoted in the piece say the Canadian retaliatory measures are hitting the Canadian market harder than the original U.S. tariffs did. Trade groups on both sides of the border, including Canada's Heating, Refrigeration and Air Conditioning Institute (HRAI) and its U.S. counterparts, are now lobbying Ottawa and Washington to preserve tariff-free trade in HVACR equipment under CUSMA.

The practical worry, as one Ontario contractor group put it in the article, is timing: "those furnaces that are old and need to be replaced are being tariffed" right as the weather turns cold and homeowners can't simply wait out the dispute. National Post also cites an industry estimate that a furnace, heat pump or air conditioner replacement that cost around $5,000 two years ago is now closer to $5,700–$5,800.

What it means for furnace replacement costs

Our own figures are built independently — labour hours at local trade rates plus current material and equipment costs, checked against real contractor quotes — but they point in the same direction as the news report. A typical furnace replacement in Canada now runs $4,300 – $7,200 CAD, with a typical job around $5,500. Furnace replacement

One Canada-specific wrinkle makes the tariff story more pointed here: under federal Energy Efficiency Regulations, gas furnaces built since mid-2019 must hit a minimum 95% AFUE, with only narrow exceptions. Canadian homeowners don't have the option of a cheaper, lower-efficiency import to dodge the extra cost — nearly every furnace sold here is already the higher-efficiency type that's exposed to these tariffs.

Heat pumps and air conditioners are affected too

Unlike the 2025 round, which was aimed mainly at gas furnaces, the article says the newer tariffs sweep in heat pumps and air conditioning equipment as well. For homeowners weighing a heat pump, a typical installation currently costs $12,000 CAD, with most jobs falling in the $9,350 – $15,600 range. Heat pump installation

Ductless mini-split air conditioning, which also relies on imported compressors and refrigerant components, typically runs $10,000 CAD ($7,800 – $13,000). Ductless mini-split Water heaters use overlapping supply chains too — a typical replacement is $2,500 CAD. Water heater replacement

What homeowners can do

If your furnace or heat pump is already failing, the National Post report is a reminder that prices are unlikely to come down this winter, even if trade talks make progress — equipment already sitting in warehouses was priced with current tariffs in mind, and any relief would take time to work through. Waiting for a tariff reversal before replacing a failed furnace isn't realistic once the cold sets in.

What you can still control is whether the quote in front of you reflects fair local labour and material costs rather than an inflated markup on top of the tariff increase. Comparing a quote against our cost guides, or running it through our "is my quote fair" tool, is a quick way to check before you sign anything. Getting two or three quotes also matters more than usual right now, since contractors are sourcing equipment from different distributors and at different times, and prices can vary more than in a stable market.

If your system still has life left, there's no cost benefit in this story to replacing it early — tariffs raise the price of new equipment, they don't make keeping an older unit running any cheaper. The sensible approach is the same one we'd recommend in any market: budget using current, local figures, get your paperwork and permits in order ahead of time, and don't delay a genuinely failed furnace or heat pump while you wait for the trade picture to clear up.