The impact of U.S. tariffs on Canada’s rental housing industry
Unless you’ve completely ignored all forms of news media in 2025, you’re aware of President Donald Trump’s imposition of tariffs on goods imported into the U.S. The U.S. targeted Canada and Mexico first, and Canada responded with its own countertariffs and reciprocal measures. The tariffs situation has escalated to include China, the European Union, and other countries, affecting everything from small businesses to global supply chains. It’s difficult to pin down the consequences of the tariffs and trade wars, as the situation changes daily. But the impact on Canada’s rental housing industry will be far-reaching and multi-faceted.
Tariffs timeline
The tariffs situation is continually being updated. But here are some key events to date.
February 1: The U.S. imposes a 25% tariff on products from Canada, with energy products being tariffed at 10%, effective February 4. Canada counters with a 25% retaliatory tariff on certain U.S. goods, with additional tariffs on a wider range of goods to come into effect 21 days later.
February 3: The U.S. pauses the tariffs to come into effect on February 4 for 30 days (March 4). Canada follows suit by pausing its first phase of tariffs.
February 13: The U.S. announces plans to impose reciprocal tariffs on all countries that impose tariffs and import taxes on U.S. goods.
March 4: The U.S. imposes the postponed 25% and 10% tariffs on Canadian goods. Canada imposes 25% retaliatory tariffs on the Phase 1 list of U.S. goods.
March 7: The U.S. exempts Canadian products that are CUSMA-compliant from tariffs. Canada pauses the implementation of Phase 2 tariffs on U.S. goods.
March 12: The U.S. imposes 25% tariffs on all steel and aluminum imports from Canada.
March 13: Canada imposes retaliatory tariffs of 25% on select U.S. products, including steel, aluminum, and some consumer products.
April 3: The U.S. imposes 25% tariffs on auto imports.
April 5: The U.S. imposes 10% reciprocal tariffs on all imports not from Canada or Mexico.
April 9: The U.S. announces a 90-day pause on higher country-specific reciprocal tariffs that were announced on April 2, excluding China from the pause. Canada imposes 25% retaliatory tariffs on autos imported from the U.S.
The impact of tariffs
Tariffs are a federal tax on imported goods. When the Trump administration imposes tariffs on Canadian goods imported into the U.S., the importing company pays this tax to the U.S. federal government. That company either absorbs this cost (reducing their profit margin) or passes the cost onto consumers (raising the price of the goods). So, when the Canadian federal government imposes counter-tariffs on American imports, Canadian importers pay this tax to the federal government and either absorb the higher costs or increase the price of goods purchased by Canadian consumers.
How will U.S. tariffs and Canadian counter-tariffs affect the rental housing industry?
Higher construction costs
The multifamily property development industry has had to deal with rising construction costs long before the tariffs situation. According to Statistics Canada, year over year, residential building construction costs across 15 census metropolitan areas (CMAs) rose 3.7 per cent in the fourth quarter of 2024. Looking back further, year-overyear residential construction costs increased by 18.1 per cent in 2021, 19.1 per cent in 2022, and 6.0 per cent in 2023.
Tariffs will increase the cost of construction materials, such as lumber, steel, and aluminum. Although Canada produces and exports these materials to the U.S. and abroad, it also imports construction materials from the U.S. According to the U.S. Census Bureau, in 2024, the U.S. imported USD$13 billion worth of steel and iron from Canada and exported USD$11 billion to Canada. Canada also imported CAD$2.91 billion worth of wood products from the U.S. in 2024.
“Canada imports about $200 million per year in cement from the United States, and about $2.2 billion in lumber per year,” said Scott Addison, CEO, Ontario Home Builders Association. “When you add a 10 or 25 per cent tariff on top of that, that goes right to the bottom line for builders. Unfortunately, those costs get passed on to new home buyers.”
Multifamily building developments rely on Canadian and imported materials for construction. Wood and aluminum studs are used to frame ceilings, floors, and walls. Structural I-beams are required to support building weight. Many base minerals are shipped to the U.S. for processing and manufacturing, and then shipped back to Canada as finished building materials, which means they could be tariffed both ways. Renovations and maintenance costs will also increase, as they depend on tariffed construction materials. HVAC systems, plumbing materials, kitchen appliances, parts for construction machinery, and many other essential products will all cost more due to tariffs.
Supply chain disruptions
During COVID, supply chain disruptions caused delays and shortages in construction materials, electronics, and other key goods. Tariffs have also disrupted long-established supply chains. This has led to delays and shortages of construction materials, as well as goods required for other industries. Canadian developers rely on a percentage of imported goods to build properties. They now must source new materials to meet schedules, as well as deal with unexpected costs.
A delay at any point in the supply chain compounds the problem down the chain. Disrupting the shipment of materials or construction equipment can stall ongoing construction projects and impede new property developments. This will worsen the housing supply shortage, especially in CMAs where there is high demand for affordable multifamily housing.
Market instability
Multifamily property development is not for the weak of heart. The industry has gone through significant ups and downs over the last 60 years. It’s a high-risk, high-investment business that requires years of planning and development, navigation of multiple layers of regulations, significant capital investments, and dependence on economic stability to ensure buyers can afford homes while getting a return on investment.
Tariffs are negatively impacting real estate investors’ confidence. Given the volatility of the market, real estate investors may hesitate to fund new rental housing projects, which will delay housing supply. Higher development costs mean either increasing selling prices and rents or lowering the return on investment. Increased development costs could also affect the ability to secure or renew financing, which will lead to higher interest rates and a less attractive investment. Current property values can also fluctuate, which will affect the financial stability of rental property owners and property managers.
“In the long term, tariffs risk becoming a structural barrier to housing supply,” said Tony Irwin, Interim President, Canadian Federation of Apartment Associations (CFAA). “When you add cost and uncertainty into the equation, the result is fewer rental homes being built and less reinvestment in our aging rental stock. This undermines housing affordability and directly impacts renters.”
Rental rates and affordability
Higher property development and maintenance costs mean higher rents. Rental property owners will have to increase rental rates to maintain profitability, as well as cover other rising costs of running their business. This will price lowto middle-income renters out of the market, especially in CMAs with high rents and low housing stock. This will increase demand for more affordable housing options and could spur an increase in homelessness.
“Tariffs will likely increase costs across the economy, impacting rental housing providers through higher expenses and economic uncertainty,” said Giacomo Ladas, Associate Director of Communications, Rentals.ca. “If unemployment rises, this could lead to more renter turnover and vacancies, putting pressure on rents. Governments should offer clear policy direction and targeted support to stabilize the sector. The industry can respond by collaborating on advocacy, sharing best practices, and finding efficiencies to reduce costs.”
Let’s be clear: homelessness will rise due to tariffs. Unemployment is expected to rise, which will displace people from their homes. According to the Canadian Chamber of Commerce, about 2.3 million jobs depend on exports to the U.S. Jobs are already being lost on both sides of the border. Hundreds of thousands of jobs could be lost across Canada, which will cause a strain on affordable housing stock as families seek lowercost housing options.
Addressing the tariffs problem
The best solution would be for the Canadian and U.S. federal governments to come to an agreement that eliminates or significantly reduces tariffs. However, this does not seem feasible, at least in the short term.
What can governments do to help the rental housing industry manage the tariffs situation?
Some policy measures include:
• Increasing funding for affordable housing projects
• Providing tax incentives and low-cost, longterm financing to developers of multifamily rental projects
• Providing direct funding for infrastructure (e.g., wastewater systems, roads and transit, electrical connections)
• Removing the HST and PST on new home builds
• Reducing or eliminating municipal development charges and fees on new developments and redevelopment projects
• Reducing or eliminate bureaucratic red tape in the project approval process
• Providing energy subsidies to offset rising utility costs
• Unlocking more government-owned land to fast-track construction projects
The rental housing industry can take steps to help reduce expenses. It begins with strategic planning and focusing on identifying Canadian alternatives to U.S. products. For example, Canadian property developers, rental property owners, and property managers can seek alternative materials sources, whether locally made or from international trading partners. They can pursue innovative construction methods that reduce dependency on imported goods. Landlord associations can support collaboration and partnerships between the government and the private sector, who can work together to create solutions that support economic viability and housing affordability.
“As an industry, it is essential that we advocate for policy solutions that recognize the pressures the sector has already been under and will compound with the imposition of tariffs, particularly if they continue for an extended period of time,” said Irwin. “That includes working with all levels of government to share data and insights, demonstrating the real-world impact of tariffs on rental housing supply, and pressing for solutions that support cost certainty and predictability.”
Conclusion
Tariffs have rocked global markets and created challenges for the Canadian economy. They have also impacted Canada’s rental housing industry by increasing construction costs, disrupting the supply chain, impacting real estate investors’ security, and reducing housing affordability. The government and rental housing industry must collaborate and be proactive in addressing this situation to help reduce the impacts and create a more stable situation for all Canadians.