The Impact of Donald Trump’s 25% Tariffs on Canadian Real Estate

Table of Contents

• 1. Overall Economic Impact of the New Tariffs
• 2. Immigration: A Key Factor for the Rental Market
• 3. Foreign Investments: Opportunities and Challenges
• 4. Mortgage Rates: Direct Influence of U.S. Policies
• 5. Summary Table of Key Impacts
• 6. Local Solutions and Strategies for Investors
• 7. Key Takeaways and Future Outlook
• 8. Conclusion: Prepare to Seize the Opportunities

U.S. economic policies have always significantly influenced the Canadian real estate market.
Since Donald Trump’s re-election in 2024 and, more specifically, the introduction of a 25% tariff
on multiple imported goods, this influence has become even more pronounced. These higher tariffs
affect not only construction costs but also the rental market, foreign investments, and mortgage rates.
In this article, we take a closer look at the repercussions and outline some potential strategies for
homeowners, investors, and tenants.

1. Overall Economic Impact of the New Tariffs

The 25% tariffs imposed by the Trump administration do more than simply increase the cost of imported
goods. They exert additional pressure on the entire supply chain related to real estate. Whether it’s
construction materials, construction equipment, or specialized labor, these factors can all raise
the final cost of a property.

The Influence on Construction Costs

With a 25% tariff, materials produced in the United States—such as certain types of lumber, steel,
or aluminum—become noticeably more expensive. This increase impacts:

• Real estate developers, who must absorb part of these costs or pass them on to buyers.
• Home builders, who are forced to re-evaluate their profit margins or look for alternative suppliers.
• Homeowners planning renovations, because the higher cost of basic materials (wood, steel, etc.)
  ultimately results in higher bills.

Consequently, potential buyers face pricier properties, which can slow demand. At the same time,
contractors and builders may reduce the number of new projects to limit financial risk.

Repercussions on Supply and Demand

In some parts of Québec and Canada, the real estate supply was already under pressure before these new
tariffs. A significant increase in construction costs can further tighten that supply. Specifically:

1. Decrease in new construction: Shrinking profit margins lead some developers to delay
   or cancel projects.
2. Slowdown in renovations: Homeowners hesitate to invest in property improvements due
   to higher costs.
3. Rise in selling prices: Fewer new projects and more competition for the same number of
   properties lead to upward pressure on selling prices.

These trends may eventually weigh on household purchasing power and reduce overall market fluidity.

2. Immigration: A Key Factor for the Rental Market

Beyond higher tariffs, Donald Trump’s immigration policies also play a crucial role. Many foreign workers
and international students choose to move to Canada for greater political and economic stability. This
trend intensifies demand for rental housing, particularly in major urban centers like Montréal, Toronto,
and Vancouver.

• Rising rents: High demand in certain areas (such as Montréal) drives up rental prices,
  exacerbating the housing shortage.
• Challenges finding affordable housing: Lower-income households compete with a growing number
  of newcomers, making it harder to secure reasonably priced rentals.
• Pressure on the rental market: If the supply of rental units doesn’t keep pace with demand,
  it becomes difficult for tenants to negotiate or find affordable accommodations.

According to a report by
Radio-Canada,
this trend has grown in recent years, contributing to housing shortages in certain regions. Some landlords see this
as an opportunity to raise rental income.

3. Foreign Investments: Opportunities and Challenges

Canada, and particularly Québec, continues to be an attractive destination for foreign investors seeking
stability. The introduction of 25% tariffs on American goods only reinforces the Canadian market’s appeal
to companies and investors aiming to diversify their portfolios. Nonetheless, there are potential downsides:

• Keeping prices high: As noted by
  TD bank,
  the influx of foreign capital sustains already elevated real estate prices in cities like Montréal or Vancouver.
• Increased challenges for local residents: Many households struggle to afford homes, especially
  if their income does not keep pace with market prices.
• Risk of speculation: An excess of purely speculative investors can destabilize the market and
  create real estate bubbles.

Benefits for the Local Economy

Despite these challenges, foreign investments bring fresh capital into local economies:

• Job creation: Building new properties or renovating existing ones stimulates employment in
  construction and related services.
• Urban development: Large-scale projects can revitalize entire neighborhoods and improve infrastructure.

Striking a balance between welcoming foreign capital and protecting residents’ purchasing power is vital.

4. Mortgage Rates: Direct Influence of U.S. Policies

U.S. monetary and economic policies—such as the decision to impose 25% tariffs—indirectly influence Canadian
mortgage rates. When the Federal Reserve adjusts its key interest rates, the Bank of Canada may follow suit
to maintain economic and monetary stability.

• Rate increases: If U.S. inflation rises due to tariffs, the Fed may raise interest rates. In a
  domino effect, the Bank of Canada might do the same, making mortgages more expensive for Canadian households.
• Impact on affordability: Higher rates mean larger monthly payments, excluding some first-time
  buyers and middle-income earners from homeownership.
• Opportunities for specific property types: Income-producing properties like duplexes or triplexes
  can remain attractive investments because rental income may offset higher interest rates.

5. Summary Table of Key Impacts

6. Local Solutions and Strategies for Investors

In response to these challenges, various measures have been proposed or implemented by provincial and federal
governments. Their goal is both to protect consumers and to support the real estate market.

Establishing a Rent Registry

In Québec, the idea of a rent registry is frequently discussed. Such a tool would:

• Prevent excessive rent hikes: Tenants would have better transparency regarding rental history.
• Improve fairness: Landlords would be required to justify significant rent increases.
• Stabilize the rental market: Limiting abuses can reduce speculative risks.

According to research highlighted by Le registre des loyers, this approach could help curb problems in
a market with strong rental demand.

Diversifying Material Sources

For builders and developers, it may be wise to:

1. Seek suppliers outside the U.S.: Turning to Europe, Asia, or Latin America can mitigate the impact
   of the 25% tariff on U.S. materials.
2. Innovate with eco-friendly or recycled materials: Green materials are gaining traction and can
   offer more stable pricing.
3. Negotiate bulk purchasing: Purchasing alliances may help secure discounts or reduce suppliers’ markups.

Adapting Your Investment Strategy

Real estate investors can capitalize on the current climate by:

• Focusing on rental properties: With rising prices and a rental shortage, rental investments can offer
  solid returns.
• Exploring emerging regions: Rather than focusing solely on large cities, looking at up-and-coming areas
  may pay off in the long term.
• Studying tax incentives and government programs: Federal or provincial programs can help offset increased
  costs or encourage the development of affordable housing.

7. Key Takeaways and Future Outlook

1. Rising construction costs: Trump’s 25% tariffs make materials more expensive, slowing new projects and
   pushing prices higher.
2. Immigration and rental demand: U.S. immigration policies drive more workers and students to Canada,
   intensifying demand for affordable rentals.
3. Sustained foreign investments: Canada remains a safe haven for international investors, keeping
   property prices relatively high.
4. Variable mortgage rates: Decisions by the Federal Reserve can influence the Bank of Canada, affecting
   home affordability.
5. Local solutions: Options such as a rent registry and diversifying material sourcing are among the
   measures to stabilize the market.

8. Conclusion: Prepare to Seize the Opportunities

The 25% tariffs imposed by Donald Trump are one of several factors influencing the Canadian and Québec real estate markets.
While they drive up construction costs and contribute to maintaining high property prices, they do not entirely prevent
profitable projects or homeownership for those who plan effectively. Staying informed about monetary and immigration
policies—and adapting your strategy accordingly—can help you navigate this changing environment.

For personalized advice or to learn more about real estate trends and solutions, feel free to consult
my blog
or visit
my website
to explore the range of services offered. In a constantly evolving market, expertise and deep knowledge are your best
assets for turning challenges into opportunities.