03/04/2025
So … our friendly neighbours 🇺🇸have imposed tariffs on us 🇨🇦 and Mexico, applying a 25% tariff on most imports, except for Canadian energy, which faces a 10% tariff. In response, Canada has enacted retaliatory tariffs on $30 billion worth of U.S. goods, with that figure set to rise to $155 billion in three weeks. This marks the most significant trade disruption for Canada in nearly a century, with tariffs now covering 30% of U.S. imports, double the impact of previous China-only tariffs. The economic effects will depend on how long these measures remain in place. A prolonged trade war could slow growth, pushing GDP to zero in 2025 and leading to a 2% economic contraction by 2026, with unemployment potentially exceeding 8%. Canada’s manufacturing sector, particularly in Ontario and Quebec, faces major risks, while Alberta and New Brunswick may experience challenges due to their reliance on commodity exports.
Central banks and governments are weighing their responses, with the Bank of Canada potentially accelerating interest rate cuts if the situation persists. Long-term strategies for Canada include strengthening key industries such as energy and agriculture, while also addressing structural challenges like interprovincial trade barriers and lagging business investment.
How will this affect the real estate market?
Time will tell over the extent, however economists expect a possibility of rising material costs due to tariffs on U.S. imports, such as HVAC systems and mechanical equipment, could increase construction expenses, potentially slowing new housing projects and impacting affordability in Canada
Additionally, trade disputes may create economic uncertainty, reducing consumer confidence and affecting housing demand and investment in new developments.
The Bank of Canada may respond to inflationary pressures from higher import costs by adjusting interest rates, which could impact mortgage rates for both current and prospective homeowners. Furthermore, supply chain disruptions caused by tariffs may lead to construction delays, worsening existing housing shortages.
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