Canada and the U.S. have always had a tight economic relationship, but tariffs have a way of shaking things up, which isn't always a bad thing. When these trade barriers go up, they send ripple effects through the economy—and that includes the real estate market. Higher costs on imported building materials mean construction prices rise, which ultimately impacts housing affordability. The real question isn’t just about trade—it’s about how these policies will shape where and how Canadians live. I added some links in the article for a better understanding. I learned a lot putting this one together.

Tariffs and Their Influence on Canadian Real Estate

Tariffs might seem like a policy discussion best left to economists, but their effects hit much closer to home—literally. When key building materials like lumber and steel become more expensive due to trade disputes, it puts pressure on the entire housing industry. By looking at how these policies have evolved, we can better understand their impact on real estate and what’s ahead for 2025.

What Are Tariffs, and Why Do They Matter?

At their core, tariffs are taxes placed on imported goods. They come in two main types:

Specific Tariffs – Fixed fees on certain goods, like $50 per tonne of imported steel.

Ad Valorem Tariffs – Percentage-based taxes, such as a 10% charge on imported lumber.

While they may be designed to protect domestic industries, tariffs often drive up costs for builders, which ultimately trickles down to homebuyers and renters.

A Look Back: How Lumber and Steel Tariffs Have Shaped Real Estate

Canada has been through its fair share of tariff battles, particularly over two major building materials: softwood lumber and steel.

The Softwood Lumber Dispute

The Canada-U.S. softwood lumber dispute has been going on for decades. Most recently, in 2024, the U.S. raised tariffs from 8.05% to 14.54%. This has added billions in costs for Canadian exports and driven up the price of building materials. When lumber prices go up, so do home prices—it’s that simple.

For a deeper dive into this continuing dispute, you can check out Canada–United States softwood lumber dispute.

Steel Tariffs and Their Effect on Construction

Steel is another key player in the real estate industry. Back in the Trump era, we saw a 25% tariff on Canadian steel. Those higher costs forced developers to either find alternatives or absorb massive budget increases. Even now, fluctuating steel prices make it difficult for builders to plan ahead.

Read more about the effects of such tariffs during pivotal years on the Impacts of Tariffs on Canadian Residential Construction.

These past battles are a warning sign for what’s happening now and what’s still to come.

The USMCA Trade Agreement: A Double-Edged Sword

The United States-Mexico-Canada Agreement (USMCA) was supposed to bring stability to trade relationships. While it has helped streamline some processes, it hasn’t stopped new tariffs from being imposed. The 2024 tariff increases, for example, still hit hard despite the trade agreement.

You can learn more about the agreement itself through United States-Mexico-Canada Agreement.

For real estate, this means material costs remain unpredictable, forcing builders, investors, and homebuyers to navigate an ever-changing landscape.

Tariffs in 2025: What’s Happening Now?

With a fresh round of U.S. tariffs in 2025, things are heating up again. A 25% duty on Canadian goods—including softwood lumber, energy products, and steel—is shaking up the market.

Sectors Feeling the Pinch

Softwood Lumber: A massive part of U.S. imports, but new tariffs mean higher costs for builders in both Canada and the U.S.

Energy: Tariffs on crude oil and natural gas are making manufacturing and construction even more expensive.

With these added costs, we’re already seeing the effects trickle down to homebuyers, renters, and investors.

For more details on how these tariffs unfold, you can explore Canada’s List of Products Subject to Retaliatory Tariffs.

How Much Are Prices Rising?

With tariffs driving up material costs, construction prices are following suit. Here’s what’s happening:

Softwood lumber prices: Up significantly, adding an average of $4,900 per single-family home.

Steel and drywall: Critical materials that are now even more expensive to import, forcing builders to pass costs onto buyers.

Overall impact: New home prices could increase by $7,500–$10,000 per unit due to these tariffs alone.

For further insights on this, you can read more via Canada-Mexico Tariffs & Rising Material Costs.

If you’re a buyer in 2025, you may already be feeling the effects of these rising costs.

British Columbia: A Case Study in Tariff Impact

British Columbia has been hit particularly hard by these tariff-driven price hikes. Since late 2024, the province has seen:

A 5% drop in home sales due to market uncertainty.

An 8% decline in new housing starts in Greater Vancouver as developers pause projects.

As home prices climb and affordability worsens, these market shifts could become the norm across Canada if tariffs remain in place.

Canada’s Response: Fighting Back with Retaliatory Tariffs

In response to U.S. trade policies, Canada has imposed its own retaliatory tariffs on American goods, impacting billions in trade. While these measures are meant to push back against unfair practices, they can also create unintended consequences, especially for industries that rely on U.S. imports.

Some of the most affected groups include:

Builders and developers who now face longer wait times and higher costs.

Suppliers who either absorb higher expenses or pass them along to customers.

Homebuyers who ultimately pay the price in higher home costs.

To dive deeper into the ripple effects across sectors, visit Tariffs Set to Slow Pace of Homebuilding in Canada.

Strategies for Navigating Tariff Challenges in Real Estate

While tariffs are causing disruptions, the industry is adapting in creative ways:

1. Diversifying Suppliers – Builders are looking beyond the U.S. to Europe, Asia, and Latin America for materials.

2. Leaning on Free Trade Agreements – Agreements like CPTPP and CETA are opening doors to alternative markets.

3. Investing in Domestic Production – More companies are focusing on Canadian-made materials to reduce reliance on imports.

4. Embracing Technology – Prefab construction and other innovations are helping cut material waste and lower costs.

These strategies won’t eliminate the impact of tariffs overnight, but they’re helping the industry stay resilient. For a real example of how these strategies are playing out in action, check out Strategies for Construction Projects Impacted by Canada-U.S. Tariffs.

Conclusion: What This Means for You

With tariffs reshaping the real estate market in 2025, buyers, sellers, and investors need to stay informed and adapt to these changes. If you're thinking about buying, selling, or investing in the Ottawa market, you probably have questions about how these trade disputes might affect your plans.

That’s where my team and I come in. Book a call or send me a DM and we discuss how you can navigate this evolving market with confidence. Whether you need insights on pricing, investment opportunities, or how to time your move, we’re here to help.

The best way to stay ahead in real estate is to stay informed!

Greg and his Ai helper