First, Canada was hit with tariffs. Then it wasn’t.
Then came March 4, a.k.a. Tariff Tuesday.
Then the U.S. stock markets tanked and big American industries — including the auto sector — ramped up their tariff objections.
Then we had Oops Never Mind About Those Tariffs For Now Thursday.
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Most Canadians don’t just have their elbows up but are applying ice packs to their necks from whiplash, thanks to an American president who cannot grasp basic economics.
As it stands, Canada has a second tariff reprieve on goods covered under the Canada-U.S.-Mexico Free Trade Agreement.
Until April 2. So this trade war is far from over. Whether directly or due to instability, it affects every aspect of our economy — and that includes housing.
Some products that go into new homes, which is where local housing pain would largely be felt, are not under tariff at the moment, but lumber is an outlier.
The U.S. decided to apply tariffs to lumber (and dairy) ahead of April 2, but last week, the U.S. National Home Builders Association (NHBA) said it had “worked with the White House” to include lumber in the wider pause.
The two essential Canadian materials going into the U.S. are softwood lumber and gypsum, used in drywall. The NHBA said it expected tariffs on these materials would add $7,500 to $10,000 to the cost of building an average single-family home, so you can see why it’s not happy.
The looming 25 per-cent tariff would come on top of the 14.5 per cent already imposed on softwood. That would mean the tariff on Canadian lumber would surge to 39.5 per cent on April 2, and if the original tariff is also increased as threatened, it could soar to 50 or 60 per cent.
This would obviously be a serious attack on Canada’s lumber industry, which would certainly also affect Canadian building.
“If you put tariffs on U.S. lumber exports, you can actually destabilize Canada’s forest industry and reduce your domestic supply and increase costs here in Canada,” Nicole Burgess, the CEO of the Saskatoon and Region Home Builders’ Association, explained.
However, she added, from the material cost standpoint, and because of some measures being considered in Canada, “we think the actual construction cost impact will be somewhat muted.”
Canadian homebuilders are lobbying federally for counter-tariff mitigation, said Burgess, because counter-tariffs, in their view, would do little apart from increase costs for home building even more.
Despite potential relief from Canada, builders are worried.
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“Our builders are on edge, given just the sheer uncertainty and instability (the trade war) poses,” Burgess told me.
While builders can use Canadian lumber, of course, other materials and products are traditionally imported largely from the U.S. These include appliances, glass windows and doors, ceramic tiles, hardware components such as fasteners, and machinery and tools.
Conrad Ehr, president of Ehrenburg Homes, anticipated the oncoming trade war some time ago and filled up the warehouse, so to speak, ahead of time. Builders, he added, buy Canadian when possible.
“It’s been our focus for the last several years,” he said.
That said, there’s another industry-integration wrinkle: “Lumber does get shipped to the U.S. and certain products will get manufactured there and shipped back to Canada,” he said.
While tariffs are terrifying, Burgess’s biggest worry comes from the 30,000-foot view — and that applies to the entire housing market.
“The most significant concern is going to be that broader economic slowdown,” she said. “We know that housing starts and reno activity are very closely tied to economic health.
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“Anecdotally, that has been the biggest concern; it’s going to exacerbate housing shortages and the price pressures that come with that.”
And who knows what the effect will be on interest rates, I might add. The Bank of Canada could increase its benchmark rate to drag down inflation, which will rise if the trade war drags on; or it could do nothing; or it could lower it in response to unemployment.
Meanwhile, more can be done on the policy side to support residential construction, Burgess said.
On the provincial side, “What we really need desperately is a solution to this PST problem,” she said.
The existing PST rebate on new homes will end April 1, 2026; and while that seems far away, people must take possession for the rebate to kick in and houses take months to build. So it’s already becoming an issue.
Municipally, a recent survey by the Canadian Home Builders’ Association showed that Saskatoon came in first on permit timelines among all major Canadian municipalities.
However, Saskatoon has the highest municipal charges for low-rise homes among Prairie cities, with an average cost of $112,200 per unit.
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“It absolutely needs to be addressed. We are the highest municipality on the Prairies and that’s not okay,” Burgess said.
Ehr said the industry is always working on strong communications with all levels of government, and also sees some local positives.
“On one hand, it’s never a good time for uncertainty like this to occur,” he said.
“On the other, if you look at all the good things going on in the provincial economy … there’s population growth, the economy is firing on a lot of cylinders. We’ve got good momentum that will hopefully help us sustain in a time of uncertainty.”
All is not lost. Keep those elbows up.