Introduction: The Tariff Impact On Canadian Homes
Canada’s housing affordability crisis has many causes—sky-high demand, limited supply, and rising interest rates. But one often-overlooked factor is global tariffs on building materials, which are silently driving up the cost of every new home, rental unit, and renovation across the country.
From lumber to steel, tariffs imposed by the U.S., China, and other trading partners are adding thousands of dollars to construction costs—costs that eventually get passed on to buyers and renters.
In this deep dive, we’ll explore:
- How tariffs increase the cost of new homes
- Why rental housing is becoming more expensive to build
- The long-term impact on housing affordability
- Possible solutions and policy changes needed
By the end, you’ll understand why trade policy isn’t just a government issue—it’s a housing issue that affects all Canadians.
The Direct Link Between Tariffs and Housing Costs
1. New Home Prices: Thousands Added Per House
- Lumber tariffs (U.S. on Canada): Add 5,000–15,000 to the cost of an average single-family home.
- Steel tariffs (global): Increase structural costs by 3–8%, raising condo and high-rise expenses.
- Appliances & fixtures (China tariffs): Add 2,000–5,000 per unit for new builds.
Source: Toronto’s proposed 2025 budget includes 6.9 per cent property tax increase
2. Rental Housing: Higher Costs = Higher Rents
Developers building rental apartments face the same material cost hikes, meaning:
- New rental units cost more to construct → Higher monthly rents to recoup investment.
- Fewer affordable housing projects get built because margins shrink.
Example: A 100-unit rental building facing 10% higher steel costs could see rents rise by 50–100/month per unit.
Source:Canada Mortgage and Housing Corporation (CMHC) – Construction Cost Trends
3. Renovations & “Missing Middle” Housing
- Homeowners renovating basements or laneway suites face inflated material costs.
- Small-scale developers (building duplexes/triplexes) struggle with unpredictable pricing.
Result? Fewer affordable housing options in cities where they’re needed most.
Source: 2025 Housing Market Outlook
Why This Makes Canada’s Housing Crisis Worse
1. Supply Can’t Keep Up with Demand
- Canada needs to build 3.5 million more homes by 2030 to restore affordability.
- Tariffs make it harder and more expensive to hit that target.
2. First-Time Buyers Get Priced Out
- Every $10,000 added to a home’s price excludes thousands of potential buyers.
- Mortgage stress tests amplify the impact.
3. Rental Affordability Erodes Further
- With higher construction costs, new rentals are priced at luxury levels.
- Older, more affordable units aren’t being replaced.
Case Study: The Lumber Tariff Effect
📈 2017: The U.S. imposes an average 20% tariff on Canadian softwood lumber.
🏠 Initial Impact: New home prices in Canada rise by $7,000 to $20,000, depending on home size.
📉 2024–2025: Despite some tariff reductions, lumber prices in 2025 remain 30%+ above pre-2017 levels, keeping construction costs—and housing prices—elevated.
Source: U.S. set to significantly hike softwood lumber duties against Canada
Possible Solutions: What Can Be Done?
1. Domestic Policy Changes
- Exempt affordable housing projects from tariffs on key materials.
- Increase support for Canadian-made alternatives (e.g., mass timber, recycled steel).
2. Trade Negotiations
- Push for permanent solutions to U.S.-Canada lumber disputes.
- Diversify imports to reduce reliance on tariff-heavy suppliers.
3. Innovation in Construction
- Modular/prefab homes (reduce material waste).
- Alternative materials (e.g., bamboo, cross-laminated timber).
What Homebuyers & Renters Can Do
While systemic change is needed, individuals can:
✅ Advocate for tariff reforms with local MPs.
✅ Support modular & prefab home builders (often more cost-efficient).
✅ Consider older homes (less affected by new material costs).
Conclusion: A Call for Smarter Trade & Housing Policies
Tariffs aren’t just a trade issue—they’re making Canada’s housing crisis worse. Until policymakers address how material costs impact affordability, homeownership and rental costs will keep climbing.
The solution? Better trade deals, smarter construction policies, and innovation to build homes without breaking the bank.
Further Reading:
- Metal Tariffs Will Turbocharge Canada’s Housing Crisis
- Building construction price indexes, by type of building and division
- BC Housing Affordability Forecast for 2025
Do you think tariffs are unfairly impacting housing costs? Share your thoughts below!
