Tariff Impact Modelling for Ontario Municipalities

Oxford Economics Australia worked with AEMO to assess how tariffs could affect Ontario municipal capital expenditure. Using bespoke economic modelling, trade exposure analysis, and scenario-based forecasting, we quantified the direct cost impacts of tariffs across key infrastructure asset types and produced the Tariff Impacts on Ontario Municipality Capital Expenditure report.

Background

Ontario municipalities face rising pressure to deliver critical infrastructure while managing construction cost escalation, supply chain constraints, and policy-driven trade risks. For investors, operators, and public-sector decision-makers, understanding how tariff changes flow through to capital programs is essential for budget planning, asset strategy, and long-term resilience.

Oxford Economics was commissioned to provide an independent, evidence-based assessment of the exposure of municipal capital expenditure to tariff-related cost increases. The work combined market data, trade statistics, and construction input analysis to build a practical view of where the greatest risks sit.

Challange

The key challenge was to convert trade and tariff dynamics into a clear estimate of capital expenditure impact. That required linking municipal infrastructure demand with import exposure across materials, machinery, fuel, and vehicles, while accounting for how those inputs contribute to the final cost of construction.

The analysis also needed to distinguish between high-level policy risk and project-level cost implications. This made it important to identify which asset classes are most exposed, how much of the cost increase is direct, and where indirect pressures may create further risk over time.

Solution

Oxford Economics Australia developed a bespoke tariff impact model to quantify the direct effect of tariffs on Ontario municipal capital expenditure. The model combined:

• Municipal capex forecasts,
• Construction input demand by asset type,
• US import intensity for relevant goods,
• And tariff schedules applied to imported inputs.

This modelling framework was then used to produce the Tariff Impacts on Ontario Municipality Capital Expenditure report, which provides a structured assessment of the cost impact across roads, bridges, water and sewerage, non-residential buildings, social housing, and vehicles.

Value Delivered

Oxford Economics Australia developed a bespoke tariff impact model to quantify the direct effect of tariffs on Ontario municipal capital expenditure. The model combined:

• municipal capex forecasts,
• construction input demand by asset type,
• US import intensity for relevant goods,
• and tariff schedules applied to imported inputs.

This modelling framework was then used to produce the Tariff Impacts on Ontario Municipality Capital Expenditure report, which provides a structured assessment of the cost impact across roads, bridges, water and sewerage, non-residential buildings, social housing, and vehicles.

Why Oxford Economics?

Oxford Economics combines world-leading economic models with consulting expertise to help clients turn uncertainty into insight. Our work supports infrastructure investors, public agencies, and private sector leaders with clear, decision-ready analysis on cost escalation, trade risk, and investment strategy.

If your organisation needs to understand tariff exposure, construction cost inflation, or the impact of policy change on capital programs, Oxford Economics Australia can build a tailored model and deliver a report that supports commercial, policy, and investment decisions.