If you’ve ever tried to build or renovate a home in Canada in recent years, you may have noticed the price of materials going up, sometimes drastically. While inflation and supply chain issues often take the blame, there’s another culprit quietly shaping the landscape of Canadian housing: tariffs.

Let’s unpack how tariffs—those taxes on imported goods—are affecting what’s already a challenging housing market across Canada.

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What Are Tariffs, and Why Do They Matter?

Tariffs are essentially taxes placed on imported goods. Governments impose them to protect domestic industries, raise revenue, or retaliate against trade policies from other countries. In theory, tariffs encourage people to buy locally-made products. In practice, especially in the housing sector, they can have a ripple effect that drives up costs.

Canada, being a trading nation with strong ties to both the U.S. and global suppliers, is particularly sensitive to changes in trade policy. When tariffs target materials used in homebuilding—like lumber, steel, aluminum, and appliances—those costs eventually get passed down the line to homebuyers, renters, and developers.

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Tariffs in Action: A Look at Lumber and Steel

Let’s start with lumber—Canada's pride and, ironically, one of its most tariff-entangled exports. The long-standing softwood lumber dispute with the U.S. has led to American tariffs on Canadian lumber, reducing Canadian exports and occasionally causing surpluses at home. That might sound like good news for Canadian builders, but the market volatility that follows often causes uncertainty and price swings.

Then there’s steel and aluminum. In 2018, the U.S. imposed steep tariffs on imported metals, including those from Canada. Canada retaliated with its own tariffs on U.S. goods. While many of these tariffs have since been lifted or reduced, the uncertainty and cost increases they introduced are still echoing in construction budgets.

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What This Means for Homebuilders

Developers and contractors feel the pinch first. A sudden tariff can inflate material costs by 10–30%, disrupting budgets and delaying projects. This is especially tough in regions already grappling with skilled labour shortages and rising land costs.

When developers face higher costs, they don’t just eat the loss. They often:

• Delay or cancel new housing starts
  
  
• Shift focus to higher-margin luxury builds instead of affordable housing
  
  
• Pass on costs to consumers in the form of higher home prices or rents
  
  

None of this helps with Canada’s urgent need for more housing supply—especially affordable supply.

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Impact on Homebuyers and Renters

Tariffs are rarely visible to the average buyer or renter, but they’re baked into the final cost of housing. Whether it’s more expensive drywall or costlier kitchen appliances, these added expenses add up.

For renters, the effects are more indirect but still significant. Higher construction costs mean fewer rental units are built, or they come to market at higher price points. This is especially concerning in cities like Vancouver and Toronto, where affordability is already stretched to the limit.

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A Compounding Effect

Tariffs don’t exist in a vacuum. Combine them with:

• Inflationary pressure on wages
  
  
• Interest rate hikes
  
  
• Global supply chain disruptions
  
  
• Domestic policy constraints on new builds
  
  

…and you’ve got a perfect storm for a housing crunch. Tariffs may be just one factor, but they’re part of a much bigger picture that continues to challenge housing affordability and accessibility across the country.

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What Could Help?

Policy coordination between trade and housing sectors is key. Governments need to consider the downstream effects of tariffs—especially on materials vital to home construction. In some cases, targeted exemptions for housing-critical imports could help ease the burden. Better still, fostering resilient domestic supply chains might reduce reliance on imports altogether.

While tariffs might seem like an abstract tool of international diplomacy, their effects are felt right at home—literally. From higher building costs to fewer housing starts, tariffs are one of the many hidden forces shaping the future of Canadian housing. Understanding their impact is the first step in building smarter, more resilient housing policy that works for everyone.

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