A potential trade war with the U.S. could significantly impact Canada’s housing market by driving up construction and renovation costs. Experts warn that new tariffs could raise the price of homebuilding materials, making homes less affordable and reducing new housing supply.
How Tariffs Could Affect Home Prices
The U.S. and Canada are major trading partners, exchanging billions of dollars in homebuilding materials each year. If President Donald Trump imposes a 25% tariff on Canadian goods starting February 1, Prime Minister Justin Trudeau has suggested Canada may retaliate with similar tariffs.
Kevin Lee, CEO of the Canadian Home Builders’ Association (CHBA), warns that these tariffs would increase the cost of construction materials, making it more expensive to build and renovate homes in Canada.
But the biggest concern is the overall economy, he added. A trade war could slow economic growth, leading to fewer housing starts, job losses, and lower consumer confidence—all of which impact the housing market.
Canada’s Housing Market Outlook for 2025
Despite the potential challenges, Canada’s housing market was expected to see growth this year. Royal LePage’s 2025 housing outlook predicted a 6% increase in home prices, while housing starts rose by 2% in 2024, according to the Canada Mortgage and Housing Corporation (CMHC).
However, Phil Soper, CEO of Royal LePage, said that high tariffs could weaken the economy, which in turn could slow housing market activity. “If economic uncertainty increases, it could reduce homebuilding and impact employment numbers,” he explained.
What the Bank of Canada is Saying
The Bank of Canada (BoC) recently cut its key interest rate to 3%, hoping to boost economic growth. However, Governor Tiff Macklem warned that a trade war with the U.S. could harm Canada’s economy, adding another layer of uncertainty to housing affordability and mortgage markets.
Which Homebuilding Materials Will Be Affected?
If tariffs go into effect, key homebuilding materials likely to see price hikes include:
- Glass products ($3.5 billion imported annually from the U.S.)
- Major appliances ($3 billion annually)
- Hardware and ceramics ($2 billion annually)
- Iron, steel, and aluminum ($14 billion annually)
- Softwood lumber, which already faces U.S. duties, could become even more expensive
Since Canada supplies most of the U.S.’s softwood lumber, additional tariffs could disrupt the long-term supply of lumber in Canada, making home construction and renovations even pricier.
How Canada is Preparing
Some suppliers are already looking for alternative material sources to reduce dependence on U.S. imports. “Our supply chains will be critical in finding solutions,” said Lee.
While a trade war would pose challenges, Soper believes it could push Canada to diversify its trade partnerships, strengthening the economy over time.
Experts also suggest that the government could introduce policies to help offset the effects of tariffs, including:
- Removing GST on new homes
- Lowering development taxes
While uncertainty remains, Canada’s housing market will adapt and adjust to new economic challenges, just as it has in the past.
Canada Housing Market 
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