As a potential trade war between the United States, Canada and other countries looms overhead, Canadian climbing company OnSite is preparing for a future that’s clouded with questions. When speaking with OnSite CEO Francis Larose about how the tariffs will impact the business, which is most known for their climbing wall construction, one word that kept coming up was ‘uncertainty.’
“The uncertainty has made the biggest impact on us,” said Larose. “It’s been difficult to give our U.S. clients a clear idea of how we’re going to handle things, especially since the tariffs are constantly changing.”
One thing was certain for Larose, though: he still plans to do business in the United States. “It’s definitely turbulent waters at the moment,” he remarked with a chuckle, “but that doesn’t mean we’re going to go out of business, or that we’re abandoning our U.S. partnerships. Really, I see it as an opportunity to build even stronger relationships.”
At the time of this article’s publication, several of the tariffs in place will have a direct impact on the climbing industry—for example, those on the steel that goes into building climbing walls. As one of the premier manufacturers of climbing walls, OnSite is not only paying rapt attention to these tariffs but seems poised to handle them with a community-first mindset.
Keep reading to learn more about how OnSite is preparing for the upcoming changes to international trade, and how these changes might impact the climbing industry overall.
A Brief Explanation of Tariffs
Fully defining a complex topic like tariffs would go beyond the scope of this story, but we want to provide a simple academic definition for anyone who may not know much about them.
A tariff is, in short, a tax on goods from other countries. Governments implement tariffs for a variety of reasons, but the end result is an added charge on goods that physically cross a country’s borders. Tariffs are collected by the government via customs authorities upon entry to the country; in the U.S., for example, that authority is the Customs and Border Protection (CBP).
There are generally two types of tariffs: specific tariffs, which are a fixed amount, and ad valorem tariffs (“according to value”), which are a percentage of the good’s total worth. For instance, if a country imposed a 10% ad valorem tariff on umbrellas, any umbrella imported into that country would require paying a fee of 10% its value to lawfully enter. Conversely, a specific tariff would require paying a flat $10 fee for importing any umbrella, regardless of its value.
Regardless of the type of tariff, the importer pays this fee when their goods enter the country. A retailer who sells umbrellas, for example, would be the one paying for the umbrella tariff. It is up to the business how they adjust their finances to accommodate tariffs; a business may choose to pass costs onto the consumer, absorb the cost themselves, or pursue some mixture of the two.
How OnSite Is Planning for the Future
Since the current tariff situation began, the OnSite team’s message has been clear: the tariffs will not affect their consumer prices. They are choosing to mitigate costs for the consumer, rather than raising sticker prices. While tariffs will objectively impact their costs—particularly when sending their climbing walls across borders—OnSite plans to adapt their practices where they can and take on whatever costs still remain.
Currently, this approach is more than feasible for the company. “Thankfully, it’s not seriously impacting anything right now,” Larose said, relieved. “It’s more the fear of instability that is impacting us.”
Some of the tariffs that will impact our industry are those on steel and aluminum. At the time of this writing, the United States has a 25% ad valorem tariff on all steel and aluminum imports, meaning physical products containing imported steel or aluminum will face a charge equal to 25% the total worth of the steel used. As an example, if OnSite builds a $1 million climbing wall project for a gym in the States, if $100K of that project’s budget went to Canadian steel, then the project would cost an extra $25K, or 25% the total value of the steel used.
Other tariffs that can alter the equation are more wide sweeping, in terms of the kinds of products they impact. At the time of this writing, the United States has a 25% ad valorem tariff on all goods imported from Canada that are not part of the Canada-U.S.-Mexico Free Trade Agreement (CUSMA). (More tariff information for businesses in Canada can be found here.) As the tariff situation continues to evolve, Larose remains confident that OnSite can weather the circumstances.
“There are multiple ways we can address this cost,” Larose explained. “Our revenue mostly comes from services rather than physical products. I’d estimate about 80 percent of it comes from our engineering, designing—the “brain work,” so to speak. And since tariffs are generally on goods that have to literally cross a border, most of our work won’t be affected.
“We’re strategizing ways to mitigate the loss if things take a turn for the worse, but even if that happens we’re already adapting our work to be less affected by tariffs. We’ll tweak our projects to best align with the tariffs, and we’ve already diversified our streams of income by having business in Europe. We want our customers to feel little (if any) downstream effects.
“It’s true that the prices won’t stay the same,” said Larose, “but neither will our projects. Once we know the rules, the rest is easy to figure out.”
The Mindset Behind the Approach
Overall, Larose and the OnSite team plan to handle the tariffs with a unique blend of tenacity, generosity, and old-school climber grit. When asked why they’re choosing to keep prices the same, even if it means losing profit, Larose had a simple answer: “Our relationships are more important.”
“I don’t see this being a forever situation,” said Larose, “but even if it were, keeping business going with our U.S. friends is more important to us. And honestly, I see this as a chance to build even stronger relationships with my U.S. friends and business partners. Just like with COVID, it’s on us again to innovate: on us to be atop our game, on us to get involved with the situation, on us to handle this as best we can. And we will handle it.
“We’re all a part of one big community—the climbing community—so we’re going to work with everyone to make sure this affects things as little as possible. We’re having a tough time developing specific processes because we don’t ‘know the rules yet,’ so to speak…but we’ve been in the U.S. market for about six years, and we plan to keep it that way.
“We’re looking forward to the future,” Larose said. “No matter the route it takes.”
This story was paid for by the sponsor and does not necessarily represent the views of the Climbing Business Journal editorial team.
