Metal Tariffs Will Turbocharge Canada’s Housing Crisis

Before Donald Trump started threatening tariffs, housing starts across Canada were already slow. Last year, only 245,000 housing units got shovels in the ground, a meagre two per cent rise compared to 2023—and 155,000 less than the 400,000 per year we need to provide enough housing for Canadians. Worse still, in Ontario, housing starts even declined, falling by 16 per cent compared to 2023. The Canada Mortgage and Housing Corporation blamed the sluggish progress on slow sales, high financing costs and increased risk as the reasons why. And tariffs are only going to slow development further.

Every year, Canada exports more than $35 billion in steel and aluminum down to the U.S. We also import about $20 billion of it back. Steel is a crucial component for new housing. Multi-family condo buildings, apartment buildings and purpose-built rentals are all made with aluminum studs to frame walls, ceilings and floors. They also use structural steam I-beams that support the weight of buildings. The minerals for these are harvested in Canada, shipped across the border for processing and manufacturing, then brought back to Canada. If an I-beam cost $500 per unit before, it could now cost us $$750. 

With steel and aluminum potentially caught in the first round of tariffs—and Trump’s threats to double the tariffs to 50 per cent—we expect multi-family condos and apartment buildings to be hit hard. Potential lumber tariffs, meanwhile, will affect single-family homes all over Canada. We’ll see fewer housing starts, ongoing projects slow to a halt and completed projects struggle to close. No element of the home-building market is safe.

Tariffs are usually a tool for fixing trade imbalances. But in this case, it seems to be more of a negotiating tactic. All the normal rules for modelling and estimating industry impacts are gone out the window because there’s no logic. Builders are already taking a pause, stepping back to watch what happens before they make their next move. That hesitation will only squeeze housing supply. Residential projects are already high-risk, high-investment ventures—take a 200-home subdivision, for example. They take two to three years of planning and construction, along with a massive amount of capital. To move forward, developers need a sense of stability, some assurance they won’t be building homes no one can afford to buy. One recent estimate suggests tariffs could result in an increase of up to four per cent on total development costs on residential projects. 

At the Ontario Home Builders’ Association, we’ve heard from builders who are involved in active projects who had lined up pre-orders of their supply chain to avoid the tariffs. Now, they have to figure out how to minimize any additional costs that might get passed onto current customers who have pre-bought homes and have yet to close. Tariffs will take longer to impact rental prices in existing buildings, but they will be noticeable during renovations or repairs. Products involved in renovations, including flooring, toilet replacements, gypsum, aluminium and steel, will all be subject to higher prices if the tariffs go ahead. 

Higher tariffs will also push up construction costs. For example, a bank might only offer financing in exchange for a guaranteed 15 per cent return on investment. That immediately takes away the builder’s ability to reduce costs. And, if all of a sudden, builders are frozen out from financing, then they can’t build. Ultimately, any new costs have nowhere to go but down to the homebuyer.

There’s a lot the federal and provincial governments can do to help with housing affordability, even without tariffs in the mix. Scrapping the GST and provincial sales taxes on new home builds could significantly lower costs for buyers. Governments should also provide direct funding for critical infrastructure that enables housing development, such as wastewater systems, electrical connections, roads and transit. Ontario’s Housing-Enabling Water Systems Fund, which has invested nearly $1.3 billion in water and wastewater infrastructure to support the construction of 600,000 homes, is proof that targeted funding can accelerate development. Beyond that, the province must cut the red tape that slows down municipal approvals, standardize the reports developers are required to submit, and unlock government-owned land to fast-track construction. 

If you listen to Doug Ford or Justin Trudeau, it’s all about buying Canadian. Our members are already doing that. They’re taking the time to find out where they can find the best price for the materials they need. They’re looking at domestic options, as well as markets in Mexico and outside of North America. But it takes time to retool supply chains—and as demand for local products increases, the prices will go up. 

Our members are disappointed—not in the manufacturers or the suppliers, but in a U.S. administration that would intentionally launch a policy that not only hurts their biggest and closest ally, but their own citizens. In Canada, we’re already in a housing crunch. Tariffs will make it that much worse.

Scott Andison is the CEO of the Ontario Home Builders’ Association.

—As told to Emily Latimer