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tariffs

Canadian homebuilders voice concerns over proposed tariffs

Tuesday, February 4, 2025

Homebuilders across the country voiced their concerns over the Trump administration’s now delayed plan to impose 25 per cent tariffs on Canadian and Mexican goods coming into the United States.

If the tariffs are implemented at the newly proposed deadline, the move would have a destructive impact on the homebuilding industry on both sides of the border. In Canada, the tariffs are expected to hurt an already challenged industry, according to the  Residential Construction Council of Ontario (RESCON).

“The move is reckless and will cause economic hardship in both the U.S. and Canada, affecting tens of billions of dollars of trade in construction materials alone,” said RESCON president Richard Lyall. “Such levies will only increase costs and lead to a further slowdown in residential construction activity which will exacerbate an already dire housing affordability crisis.”

The association predicts that builders in Canada would have to look at alternative sources, such as domestic producers or suppliers from other countries. As supply chains adjust, the disruption and increased costs could also lead to delayed or canceled projects or slowdowns in new home construction.

This could worsen the housing shortage and drive costs upwards.

“Our countries and supply chains are intertwined and dependent on each other, so nobody wins in a tariff war,” adds Lyall. “Homebuilding industries on both sides of the border will be negatively affected. Our industry relies heavily on imported materials from the U.S. A tariff war only makes imports more expensive and will add to the cost of building a home. Likewise, Americans will suffer as U.S. homebuilders rely on Canada to fully meet their lumber needs.”

According to the National Association of Home Builders, about 30 per cent of the lumber used in the U.S. is imported. More than 85 per cent of the imports come from Canada. Other essential materials come from Canada are steel and aluminium, as well as cement and gypsum.

The Canadian Home Builders’ Association said, in a statement yesterday, that the potential impact on the Canadian lumber industry is “very worrisome.” Tariffs and fewer 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,” CHBA stated. “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.”

While Canada’s countervailing tariffs weren’t applied to most construction goods, future tariffs were previously expected to target aluminum and steel, CHBA advised this would increase construction costs and further erode affordability. Canada exports more than $20 billion in steel and aluminum to the U.S. every year, but also imports abut $17 billion on steel and aluminum. Tariffs would increase costs on both sides of the border.

CHBA CEO Kevin Lee said any retaliatory tariffs should avoid construction products and materials, unless domestic or import solutions can be easily accessed. “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,” he said.

 

 

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