U.S. President Donald Trump’s tariffs will make new homes more expensive and delay construction, just as they are needed more than ever, industry voices warn.
The 25 per cent tariffs on imports from Canada and Mexico went into effect at midnight, Tuesday, causing a stock market dip and drawing widespread condemnation from Canadian leaders.
“Theses tariffs are going to be a mess,” said Richard Lyall, president of the Residential Construction Council of Ontario (RESCON), which represents builders. Lyall said the tariffs, and the retaliatory ones Canada is slapping on the U.S., will “drive up the cost” of materials and equipment for building housing.
Buyers are the ones who will ultimately pay for these price increases, Lyall said.
The two economies are so integrated that the tariffs will also impact American housing prices, despite Trump’s campaign promises to cut costs for average people, he added. The American National Association of Home Builders is also concerned. Chairman Buddy Hughes said in an email they will “harm housing affordability,” and urged the administration to reconsider.
“The amount of trade back and forth is massive,” said Lyall, adding the situation create chaos and uncertainty, which will inevitably stall projects as this undermines both consumer and builder confidence.
It represents a clear break in U.S. policy, which for decades has encouraged free trade between the two countries. “Ronald Reagan must be turning over in his grave.”
Canada exported 6.56 million tons of steel to the U.S. last year and accounted for 56 per cent of aluminum imports in 2023, according to Lyall. At the same time, we also rely on steel and aluminum from the U.S., as well as materials like plywood, glass, lumber, and ceramics.
Canadian Prime Minister Justin Trudeau called the tariffs “a very dumb thing to do” in a Tuesday press conference, saying, “there’s absolutely no justification or need” for them. In response, he’s putting a 25 per cent tariff on $30 billion of U.S. products.
This will be expanded to another $125 billion in U.S. goods in 21 days.
Kevin Lee, CEO of the Canadian Home Builders’ Association, said he’s particularly concerned about the impact of reciprocal tariffs on construction costs. Canada depends on, for example, washing machines and gas stoves from the U.S.
Appliances are included on the list for the first phase of the Canadian counter tariffs, steel and aluminum are planned for the second, if the U.S. does not reverse its course.
Builders will have to pivot to sourcing these items from elsewhere, or face higher prices, Lee said.
The trade war will have a huge impact on the Canadian economy in general, both Trudeau and the country’s premiers have cautioned.
Ontario Premier Doug Ford, who is pulling American alcohol off the shelves of the LCBO and cancelling a contract with Trump adviser Elon Musk’s Starlink internet, said Tuesday the tariffs will have a devastating impact.
Auto assembly plants will likely be shut down within days, Ford added.
Lee said the tariffs will lead to people spending less, job losses, and less of a market for new homes, resulting in fewer housing starts.
“In order to be able to build we need buyers to buy,” he said. “When we know we need more houses not less, that’s a huge concern.”
The home-building industry was already facing challenges such as higher interest rates and development taxes, Lyall said.
This puts goals like Ontario’s ambitious target of 1.5 million homes by the end of 2031 even more out of reach.
“If this continues that is not happening,” Lyall added.
“This tariff thing just throws everything into turmoil.”
