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The Canadian Home Builders’ Association (CHBA) condemns U.S. President Trump’s 25% tariffs that will further degrade housing affordability both in the United States and Canada, and urges the federal government to do what it can to help mitigate the impacts on an industry that is already struggling to build more housing supply and keep costs down for buyers.
“A slowdown in the Canadian economy due to fewer exports to the U.S. because of these tariffs would be the number one challenge, as a slowing economy inevitably leads to reduced residential housing investment, starts, and supply,” says CHBA CEO Kevin Lee.
Canada’s countervailing tariffs could cause increases in construction costs, though as outlined thus far, they are mostly not applied to construction goods (other than appliances, aluminum and steel). CHBA advises that Canadian countervailing tariffs on construction products and materials would increase costs of construction, further eroding affordability and access to housing for Canadians. This would be detrimental to an industry that is struggling in many parts of Canada already.
Retaliatory Canadian tariffs on construction materials would have substantial effects on the costs of home construction. Canada imports some $3.5B in glass and glass products, $3.1B in major appliances, $2.2B in hardware, and about $1B in ceramic tile and products. Of those products, only appliances are being targeted by Canada in the first phase of tariffs. But the second phase of tariffs, slated to come into place after 21 days, currently includes steel and aluminum. Canada exports over $20 billion in steel and aluminum to the U.S. annually, but also imports some $17 billion on steel and aluminum. Tariffs will increase costs on both sides of the border. It is worth noting that CHBA’s counterparts in the U.S., the National Association of Home Builders, are also actively advocating against tariffs on construction goods.
All Canadian importers in the residential supply chain will need to look at alternatives to U.S. goods upon which Canadian countervailing tariffs are placed, seeking sources in Canada and from other countries. This will take time, and products will still likely be more expensive than the U.S. goods prior to tariffs, though they may be less than the 25% increase. All efforts to “buy Canadian” where possible will also serve to bolster our economy now and into the future.
It is worth noting that with these tariffs, the potential impact on the Canadian lumber industry is very worrisome, as tariffs and resultant reduced exports could cause Canadian mills to shut down. This could permanently reduce lumber output capacity for the Canadian market and increase costs domestically over time. The same could be true for other Canadian construction goods. Support for Canada’s lumber industry and others will be very important for residential construction as well.
CHBA is also concerned about the potential devaluing of the Canadian dollar, which could in turn increase the cost of imports.
“While Canada’s retaliatory tariffs are understandable, all considerations regarding the industry and housing supply and affordability should be considered, with an emphasis on avoiding tariffs on construction products and materials, unless other domestic or import solutions can be easily found for comparable prices. Governments can also help offset the impact that countervailing tariffs will inevitably have on housing affordability by removing the GST (and PST/HST) on new construction, as well as lowering development taxes at the municipal level, particularly in those municipalities with extremely high development taxes,” said CHBA CEO Kevin Lee.
On Feb. 3, U.S. president Donald Trump paused implementing the announced tariffs until March 4 pending Canadian actions to secure the border against almost non-existent fentanyl smuggling. This week, the U.S. ambassador signaled the U.S. is “pleased” with Canada’s progress on the issue, leaving open the possibility the tariffs will not be implemented. Separate tariffs on Canadian steel and aluminum are scheduled to go into effect on March 12 with no condition of border measures attached. – ed.