by Josh Clark 
The United States and Canada are embroiled in a historic trade war after former President Donald Trump signed executive orders on February 1, 2025, imposing 25% tariffs on most Canadian goods and 10% on energy exports, including oil, gas, and uranium. These tariffs, effective February 2025, were justified by Trump as a response to border security and drug trafficking concerns, despite U.S. data showing minimal fentanyl flows from Canada. In retaliation, Prime Minister Justin Trudeau announced 25% tariffs on $155 billion worth of U.S. goods, targeting products like orange juice, beer, bourbon, motorcycles, and steel.
This escalating trade war has far-reaching implications, not just for trade and manufacturing but also for Canada’s real estate market. Here’s how the tariffs could reshape the housing landscape and what it means for buyers, sellers, and investors.
Key Details of the Tariffs
Let’s start by taking a closer look at what the actual tariffs are from the United States and how Canada has responded.
Understanding the U.S. Tariffs
The United States is Canada’s largest trading partner, and any changes in trade policies, such as tariffs, can have far-reaching consequences. Tariffs are taxes imposed on imported goods, often used to protect domestic industries or as a negotiating tool in trade disputes. When the U.S. imposes tariffs on Canadian exports, it can lead to:
- 25% on all Canadian goods except energy (effective February 4, 2025).
- 10% on Canadian energy exports, including oil, gas, and uranium.
Canada’s Response to the U.S Tariffs
- Phase 1: 25% tariffs on $30 billion of U.S. goods (effective February 4, 2025), including beverages, cosmetics, and paper products.
- Phase 2: Tariffs on $125 billion of U.S. goods (after a 21-day comment period), targeting vehicles, steel, aluminum, beef, pork, and dairy.
These factors can indirectly influence the Canadian real estate industry in several ways.
Ottawa has urged Canadians to buy domestic products and pledged support for affected industries. However, the economic fallout from these tariffs could be severe, with experts warning of reduced GDP growth, higher inflation, and long-term damage to both economies.
Economic Implications of the Tariffs
The tariffs threaten to shrink Canada’s GDP by 3.6% and push U.S. inflation to 4%. The Bank of Canada has cautioned that prolonged tariffs could reduce business investment, weaken the Canadian dollar, and create long-term economic damage. Both nations risk supply chain disruptions, higher consumer prices, and job losses in manufacturing and agriculture.
For the real estate market, these economic shifts could have a domino effect, impacting construction costs, buyer confidence, and regional housing dynamics.
How Tariffs Could Impact Canada’s Real Estate Market
1. Construction Costs and Housing Supply
Tariffs on U.S.-imported building materials—such as steel, aluminum, appliances, and glass—could raise construction costs by 10–15%. Canada imports over 14 billion annually in U.S. metals and 3.5 billion in glass products, which are critical for homebuilding.
- Higher Home Prices: Increased construction costs are likely to be passed on to buyers, making homes less affordable.
- Slower Housing Starts: Developers may delay or cancel projects due to rising costs, worsening housing shortages in high-demand cities like Toronto and Vancouver.
2. Economic Slowdown and Buyer Confidence
A potential recession triggered by tariffs could reduce demand for homes. Unemployment fears and economic uncertainty may deter buyers, particularly in regions heavily reliant on manufacturing and energy exports.
- Calgary’s Volatility: Calgary’s housing market, tied closely to oil exports, could face significant volatility if energy tariffs persist.
- Buyer Hesitation: Even in stable markets, job insecurity and reduced household incomes could lead to fewer home purchases.
3. Interest Rates and Mortgage Pressures
The Bank of Canada may cut interest rates further to stimulate the economy, but higher inflation from tariffs could complicate this strategy.
- Variable-Rate Mortgages: Homeowners with variable-rate mortgages could face instability if tariffs trigger currency fluctuations.
- Affordability Challenges: While lower interest rates might encourage borrowing, higher inflation could offset any benefits, keeping housing affordability out of reach for many.
4. Regional Divergence
The impact of tariffs will vary across Canada, with some regions facing greater challenges than others.
- Calgary: A recession linked to oil tariffs could reverse recent price gains, though pre-pandemic lows are unlikely.
- Toronto and Vancouver: Supply constraints might insulate prices, but affordability issues could deepen if construction slows.
- Renovation Sector: Higher costs for U.S. materials, such as fixtures and lumber, may dampen renovation activity, affecting contractors and homeowners alike.
Government Mitigation Efforts
To offset the impacts of the tariffs, the Canadian government has announced several measures:
- Removing GST on New Homes: This could help reduce costs for buyers and stimulate demand.
- Reducing Development Taxes: Lower taxes on new developments may encourage builders to continue projects despite rising material costs.
- Tariff Relief for Businesses: A remission process will allow businesses to apply for relief on tariffs, helping to ease the financial burden.
Best Ways to Invest in the Alberta Real Estate Market Even with the Tariffs Looming
Despite the uncertainty caused by the U.S.-Canada trade war and looming tariffs, there are still strategic ways to invest in Alberta’s real estate market. One of the most effective approaches is to focus on multifamily properties, which offer stable cash flow and long-term appreciation potential. With rising demand for rentals due to population growth and economic migration, multifamily investments can provide a hedge against economic volatility. Additionally, leveraging government programs like the CMHC MLI Select Program can make entering the market more accessible and financially viable. By targeting undervalued properties in high-demand areas and taking advantage of incentives, investors can mitigate risks and capitalize on Alberta’s resilient housing market.
Leveraging the CMHC MLI Select Program for Multifamily Investments
The CMHC MLI Select Program is a game-changer for real estate investors, especially in the face of economic challenges like tariffs. This program allows investors to purchase multifamily properties with just a 5% down payment and access extended amortization periods of up to 50 years.
These features make it easier to enter the market with lower upfront costs and improve cash flow through reduced monthly mortgage payments. For investors concerned about rising construction costs due to U.S. tariffs on building materials, the MLI Select Program offers a way to bypass these challenges by focusing on existing multifamily properties.
By scaling portfolios with lower financial barriers and improving cash flow, investors can build a resilient and diversified real estate portfolio even in uncertain times. This program not only makes investing more accessible but also positions investors to thrive as Alberta’s rental market continues to grow.
For more information on the MLI Select program in Calgary or Edmonton, reach out to New Homes Alberta today! New Homes Alberta
Risks to Consider
While Alberta’s real estate market offers many opportunities, investors should be aware of potential risks:
- Energy Sector Volatility: The province’s economy remains tied to oil and gas, which can be affected by global market fluctuations.
- Impact of Tariffs: U.S. tariffs on energy exports could create short-term economic challenges, impacting buyer confidence and housing demand.
Conclusion
The U.S.-Canada trade war poses significant risks to Canada’s real estate market, threatening to stall its recovery and exacerbate affordability challenges. Higher construction costs, economic uncertainty, and regional disparities could reshape the housing landscape in the coming years.
While the full impact remains uncertain, economists urge policymakers to prioritize diversification of supply chains and targeted stimulus to cushion the blow. For buyers, sellers, and investors, staying informed and prepared for potential market shifts will be key to navigating this uncertain period.
As the situation evolves, one thing is clear: the ripple effects of these tariffs will be felt far beyond the trade sector, reshaping Canada’s economy and housing market in profound ways.