Severe Impact of Trump's Tariffs on Ontario's Housing Sector

Donald Trump has enacted significant tariffs on Canadian imports, and this move will likely have "severe repercussions" for Ontario’s housing market, according to the Ontario Home Builders’ Association (OHBA).

This warning was issued after U.S. President Trump implemented a 25 percent tariff on all Canadian and Mexican imports, while Canadian energy faced a lesser 10 percent tariff. In contrast, China received a similar 10 percent tariff.

In response, both the federal government and provincial leaders promised strong retaliatory measures. Prime Minister Justin Trudeau announced that Canada would immediately impose tariffs on $30 billion worth of U.S. goods, with plans for further tariffs on an additional $125 billion worth of American products after 21 days.

Ontario's Premier Doug Ford emphasized he is ready to take supplementary actions. This includes removing U.S. alcohol from Liquor Control Board of Ontario (LCBO) shelves and potentially cancelling a $100-million agreement with Elon Musk's SpaceX for Starlink internet services in rural areas.

Ford also mentioned he could legislate "Buy Ontario" policies and threatened on U.S. television to halt energy supplies to certain states if the tariffs lead to negative impacts. However, his office clarified that any energy supply changes would not happen immediately and would be implemented gradually.

The OHBA expressed concern that the very threat of tariffs had already created considerable uncertainty, adversely affecting the housing industry prior to their implementation. The new tariffs and subsequent Canadian responses may effectively "pull the rug out" from under the housing sector.

Scott Andison, CEO of OHBA, shared a troubling observation: "I spoke to a builder recently who sold just two homes in all of 2024. The market is already struggling, and the fallout from these tariffs could worsen the situation considerably." He added, "Builders across Ontario are facing survival challenges, and this unwarranted economic aggression will bring further devastation to our industry."

Richard Lyall, president of the Residential Construction Council of Ontario, echoed Andison's sentiments. He highlighted that both Canadian and U.S. residential construction are already grappling with a range of difficulties and that these tariffs will only amplify economic pressures on builders.

"Tariffs will lead to increased costs for construction materials, which will ultimately be passed on to consumers," Lyall said. This will likely cause an additional slowdown in home construction and worsen the existing housing affordability issues. Ontario has ambitious plans to build 1.5 million new homes by 2031, requiring about 150,000 new housing starts annually. However, recent reports indicate that construction is stalling and new single-family home numbers are at their lowest in nearly seven decades.

Following a recent election, Ford's Progressive Conservative party promised to invest $50 million in initiatives supporting factory-built homes and innovative construction technologies. The government also intends to create a "permitting czar" and establish a provincewide tool to improve land-use planning and building permit approvals.

While the OHBA has indicated it will collaborate with the Ontario government to lessen the effects of these tariffs, the potential damage to the housing market could be extensive.

housing, tariffs, Canada