Desjardins Housing Outlook: Hammered by Tariffs: Impacts of the Trade War on the Canadian Homebuilding Sector

US tariffs on imports of Canadian lumber, steel and aluminum will affect building materials producers and the broader construction industry by reducing foreign demand, potentially impacting input prices here at home.

At the same time, a weakening Canadian dollar and retaliatory tariffs on imports from the US will increase costs for homebuilders who rely on American construction materials. Higher costs for these materials could lead to increased project budgets and potential delays.

In addition to driving up direct materials costs, tariffs are creating broader economic uncertainty that is likely to lead to a recession in Canada. This will cause the unemployment rate to rise considerably and could soften housing demand.

The impact of tariffs will vary significantly across Canada depending on local industry structures and supply chain dynamics. Ontario and Quebec are considered particularly vulnerable to US import tariffs. Together, they accounted for half of Canada’s national housing starts in 2024, suggesting that trade war impacts in these two provinces could noticeably influence national housing starts trends.

The homebuilding industry will likely need to adjust by diversifying supply chains, finding local substitutes and improving efficiency. Government policy could play a key role in shaping industry responses.