How a Trade War and U.S. Tariffs Could Impact Canada’s Housing Market
Industry experts are warning that a potential trade war between Canada and the United States could pose significant challenges for Canada’s housing market, potentially increasing construction and renovation costs. The two countries are each other’s largest trading partners, exchanging billions of dollars in homebuilding materials annually.
Homebuilders are bracing for the potential fallout if U.S. President Donald Trump follows through on his plan to impose a 25% tariff on Canadian goods starting February 1. In response, Prime Minister Justin Trudeau has expressed support for “dollar-for-dollar matching tariffs,” should the U.S. proceed with its measures.
“A trade war triggered by U.S. tariffs would be highly problematic for Canada’s housing sector,” said Kevin Lee, CEO of the Canadian Home Builders’ Association (CHBA). He noted that retaliatory tariffs from Canada could further drive up construction costs, impacting housing affordability and supply. However, the broader concern is the effect on Canada’s economy as a whole.
“An economic slowdown or recession directly translates into fewer housing starts due to uncertainty and potential job losses,” Lee said. “That’s our biggest concern.”
This warning comes at a time when Canada’s housing market is recovering, with home prices and housing activity expected to rise. Royal LePage’s 2025 housing outlook, released in December 2024, projected a 6% increase in average home prices. Meanwhile, housing starts were up 2% year over year in 2024, according to the Canada Mortgage and Housing Corporation.
Which Building Materials Could Be Hit the Hardest?
According to CHBA’s Lee, several key homebuilding materials could see price hikes if tariffs are imposed. Canada annually imports:
- $3.5 billion in glass products
- $3 billion in major appliances
- $2 billion in hardware
Additionally, Canada imported over $14 billion in primary metals—such as iron, steel, and aluminum—from the U.S. in 2023, according to Statistics Canada.
With Canada aiming to boost housing supply, any drop in housing starts due to rising costs could create further challenges for affordability and market stability. “As Canada looks to increase housing supply, having housing starts decline would be a significant problem,” Lee warned.
