A secret information brief prepared for Canada’s incoming housing minister last year outlined a worst-case scenario amid a trade war with the United States — where tariffs and retaliatory action destabilized the housing market and jeopardized housing and infrastructure projects worth $27.8 billion.
The scenario did not ultimately come to pass. But the document, marked as “secret” and released under the access to information system, offers a glimpse at the economic ramifications that officials were bracing for last spring. The federal government says its forecast was written in April 2025, then provided to then-incoming housing minister Gregor Robertson among transition documents.
If 25 per cent tariffs were imposed on construction and homebuilding materials and Canada cracked back with retaliatory actions against the United States, this internal forecast warned that $11.4 billion in “approved, but unannounced” funding to be handed out by the housing and infrastructure department could be in jeopardy, translating to 726 individual projects the government planned to back, with a total value of $27.8 billion.
“The resulting uncertainty around costs, supply chains, and business confidence may also lead to job losses within the construction sector,” it said.
Over the last year, the trade relationship between Canada and the U.S. has been on shifting ground. U.S. President Donald Trump has imposed a series of tariffs on imports from Canada, but the specific percentage and products impacted have changed repeatedly. One Toronto-area developer, speaking to the Star last week, says the uncertainty has left them on shaky ground — unable, still, to say how much developments will wind up costing them.
“The arrow hasn’t gone one way or the other,” said Scott McLellan, chief operating officer for Plaza Corp, which has five highrises underway in Toronto. “We’ve been nervous and concerned, greatly, throughout this whole process.”
The internal federal forecast warned that rising costs on builders would also mean higher prices for the final product: “Developers and builders initially absorb these costs but ultimately pass them on to consumers,” it said.
A spokesperson for Housing, Infrastructure and Communities Canada, in a statement, said while the magnitude of impact forecast in that briefing document hasn’t come to pass, the trade situation with the U.S. “continues to be a factor” for the homebuilding and infrastructure sector.
“Tariffs create economic uncertainty, increase material costs and price volatility. Over the past year, the trade environment has evolved significantly — especially with the imposition and then retraction of broad-based Canadian counter-tariffs,” spokesperson Steve Cloutier wrote.
While the vast majority of Canadian exports still enter the U.S. tariff-free because they’re exempt under the Canada-U.S.-Mexico Agreement on trade (CUSMA), Cloutier noted that many goods — including steel, aluminum, wood products and some automotive products — are still subject to sector-specific global tariffs, issued under Section 232 of the Trade Expansion Act.
Cloutier also pointed to the U.S.‘s imposition of a global 10 per cent tariff on imports — which happened after the U.S. Supreme Court struck down Trump’s previous tariffs against dozens of countries.
Because of CUSMA, that 10 per cent tariff only applies to a small proportion of Canadian exports to the U.S. It also expires after 150 days, unless extended by an act of Congress. Trump has also threatened to impose other sector-specific Section 232 tariffs, which are issued on national security grounds.
McLellan, with Plaza Corp, says the last year has been one of uncertainty.
“We always assume risk in our business. We know during the two- or three- or four–year construction period, things could happen. Lumber prices could increase because of a natural disaster somewhere,” McLellan said. But with the shifting tariff plans, he said the risk was far more significant as a large portion of materials for homebuilding cross the border at least once.
And tariff-related cost inflation is just one of several factors dampening the homebuilding market right now, McLellan added, including recent cost pressures from surging fuel prices and the cratering of new home sales.
Their team hasn’t tried to launch a new project in years, he said, instead focusing on getting existing developments across the finish line. As other builders hold back, he fears a reduction in jobs in the construction sector.
Cloutier, the federal spokesperson, framed the trade environment as a reason for the government to try to strengthen Canada’s domestic building capacity, using the example of the Build Canada Homes agency — the goals of which include creating steadier demand for the factory-built home industry.
“As the global economy undergoes a fundamental shift, we know that Canada can give itself far more than any foreign government can take away,” Cloutier wrote, noting that Canada still wanted to work with the U.S. “toward trading conditions that benefit businesses and workers on both sides of the border.”
With files from Josh Rubin
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