The U.S. Impact on the Canadian Housing Market

Posted on 5th April 2018
Tags: canada’s housing market, housing market, donald trump, economy, u.s. economy, u.s. tariffs. republican party, white house,

Recently, the U.S. imposed tariffs on metals like steel and aluminum, suffering severe backlash from other nations, many of which are allies. This has caused a ripple effect that has undermined the stock market and could jeopardize the international trading system.

Canada, the largest supplier of steel and aluminum to the U.S., is one of the countries that must grapple with the actions and decisions of its most important trading partner. The fallout could be immense with the housing market and homebuyers feeling the repercussions and mounting some form of retaliation.

The New Tariffs 

The Trump administration has only released small details about the new tariffs but it’s believed that the U.S. will impose a 25% tariff on steel and a 10% tariff on aluminum. This news caused the Canadian dollar to plunge and the stock market to dip.

The U.S. enacted new tariffs under a stipulation that allows the president to revise tariffs if it is in the name of national security. For some reason, this little-known trade law was put into practice. These tariffs were controversial to U.S. trade partners but also had its detractors in the GOP and on Capitol Hill. 

The Construction Industry and the Housing market

The supply chain and cost of materials will be impacted by these tariffs, which will make construction projects prohibitively more expensive. Any price increase or inflated cost will most likely trickle down to homebuyers. This can raise housing prices which could price some prospective buyers out of the market. It could be profitable for sellers, heat the rental market or it could lower supply for a period. Only time will tell and it is also dependent on what counter-measures Canada plans to put into place.

With the right plan in place, Canada could strengthen other trade relations or have the U.S. reconsider, erasing any negative impact on the housing market or the construction industry.

Canada and the U.S. have an integrated economy so not only does this have the potential to hurt both countries economically, it can strain the diplomatic relationships in ways beyond trade.