Trump's new tariffs are coming! Canadian housing prices soar in the new round
Trump's new tariffs will hit the Canadian real estate market hard - rising steel and aluminum prices may push up housing prices, experts warn that the real estate market may face a heavy blow!
US President Trump recently signed an executive order announcing a 25% tariff on all imported steel and aluminum starting from March 12th, which has sparked strong concerns among Canadian real estate developers.
This will be a heavy blow to the real estate industry and will directly affect the housing industry, "warned Scott Anderson, CEO of the Ontario Home Builders' Association.
The steel and aluminum tariffs have led to an increase in construction costs, and the Canadian real estate market may be hit by a "price surge"
The construction industry is highly dependent on key materials such as steel, aluminum, wood, concrete, and gypsum, and the new tariffs will lead to a significant increase in the procurement costs of these materials, thereby driving up the cost of building construction.
The combination of high interest rates, inflation, and tariffs will lead to chaos in the real estate market.
Currently, interest rates in Canada are at a high level, which puts significant financing pressure on developers; In addition, the cost of building materials has surged during the epidemic and has not yet returned to normal levels. Now, the additional 25% tariff will further push up housing prices, making buying a house more expensive.
Real estate developers have stated that the cost of building a house may be "too high to bear".
Currently, housing construction can still proceed, but the problem is that housing prices will be too high for consumers to afford, especially first-time homebuyers, "said Anderson.”
How do tariffs affect Canadian real estate?
According to reports, Canadian real estate developers heavily rely on the US market, and the rising cost of steel and aluminum will push up the cost of new home construction. The profits of builders are already meager, and now they are facing additional costs, which may lead to the stagnation of development plans.
In addition, the new tariffs will also lead to a surge in housing prices, making the threshold for home purchases higher. The reason is that builders are forced to raise prices, while homebuyers' affordability has been affected by high interest rates and inflation, and the real estate market may face a new 'crisis'.
The potential retaliatory tariffs will further increase costs. Canada exports approximately $20 billion worth of steel and aluminum products to the United States annually. If the Canadian government implements retaliatory tariffs on American products, building materials such as cement and wood may also be affected, leading to skyrocketing construction costs.
BMO economist Robert Kafsicci pointed out that Canada exported $35 billion worth of steel and aluminum products to the United States last year, accounting for approximately 1% of GDP. Once the tariffs are fully implemented, the construction industry will face greater challenges.
The impact of Trump's tariff policy has begun to manifest, and the Canadian real estate industry, construction industry, and homebuyers may all be severely impacted. At present, the Canadian government has not announced any countermeasures, but if the situation worsens, the real estate market may face greater uncertainty.
Source link:
https://financialpost.com/real-estate/home-builders-housing-sector-steel-aluminum-tariffs