How Do Tariffs Impact Housing in Canada?

Understanding the Real Cost of a Trade War

Let’s talk tariffs—and what they really mean for Canada’s housing market.

We’ve all seen how global trade tensions can ripple through everything from gas prices to groceries. But one area that often gets overlooked? Real estate. Whether you're a first-time buyer, an investor, or just trying to keep up with your mortgage, trade wars and tariffs could be hitting closer to home than you think—literally.

What Are Tariffs, and Why Should Canadian Homeowners Care?

Tariffs are essentially taxes on imports. When countries slap tariffs on goods coming in from abroad, it makes those products more expensive. The recent trade friction between the U.S. and other global players, including Canada, has reignited the tariff talk. While we’ve dodged some of the bigger bullets—at least for now—the housing market could still be facing some serious side effects.

We're talking construction costs, mortgage rates, and even housing supply.

Tariffs and Construction Costs: A Costly Combo

Here’s where things get real: Canada relies heavily on imported building materials like steel, aluminum, and lumber—much of it from the United States. According to RBC Economics, we imported over $7.5 billion in steel and $9.4 billion in aluminum from the U.S. last year alone. Tariffs on these materials can make homebuilding significantly more expensive.

Let’s break it down:

• Higher costs for steel = more expensive framing.

• Higher aluminum prices = pricier HVAC units, windows, and appliances.

• Threat of new lumber tariffs = pressure on everything from flooring to framing.

The National Association of Home Builders estimates that these added costs could tack on nearly $9,000 to the price of a newly built single-family home. In a market where affordability is already a stretch, this is a big deal.

Tariffs, Inflation, and Your Mortgage Rate

Now, let’s talk borrowing. When tariffs drive up the cost of goods, inflation tends to follow. And when inflation rises, interest rates usually go up too. That’s a one-two punch for buyers and homeowners alike. Not only is the cost to build rising, but the cost to borrow is increasing too.

The Bank of Canada is keeping a close eye on things. While there’s hope for rate cuts to ease the pressure, ongoing global uncertainty could tie their hands. If inflation persists, we could see even higher mortgage rates on the horizon.

What This Means for Housing Supply—and Demand

Canada is already facing a housing supply crisis. According to the CMHC, we need to build 5.8 million new homes by 2030 just to restore affordability. But here’s the catch: higher construction costs and economic uncertainty could lead developers to hit pause on new projects. That means fewer homes on the market, increased competition, and—you guessed it—higher prices.

And it’s not just about materials. Labour shortages, supply chain delays, and cautious investors all add fuel to the fire.

A Cooling Economy Could Cool Housing Confidence

Trade wars don’t just hit the cost of goods—they hit jobs too. If the economy slows and layoffs start to climb, Canadians may start second-guessing major purchases like a new home. That drop in confidence could slow demand, which might stabilize prices in some areas—but it could also mean fewer transactions overall, which affects everyone from buyers to sellers to mortgage lenders.

Existing homeowners renewing at higher rates might feel the squeeze, and new buyers could have a harder time qualifying for loans.

So, What’s Next?

Tariffs might seem like a big-picture economic issue, but their impact hits where we live—literally. They can raise home prices, increase mortgage costs, and put pressure on both supply and demand. While there’s still a lot of uncertainty ahead, one thing’s clear: staying informed is more important than ever.

Whether you're thinking of buying, selling, or just want to understand how the bigger picture affects your local market, we’re here to help.

Want to know how these global shifts might impact your home's value or your next move? Let’s connect.
Reach out directly here on our site or email ad@damicorealestate.ca 

We’re always up for a coffee and a real estate chat.