U.S. tariffs set to slow pace of homebuilding in Canada: CHBA

Canada’s building industry is warning that a trade war with the United States will slow down the pace of home construction.

Canadian Home Builders’ Association CEO Kevin Lee said in Ottawa on Tuesday that the U.S. tariffs on Canada will have a “muted” impact on the industry on their own.

But he said an expected slowdown in the economy tied to tariff impacts could hold the national housing market back, dragging down housing starts.

Lee said that, after weeks of President Donald Trump threatening to impose tariffs on Canadian exports, consumer confidence is already taking a hit.

He said fears about job insecurity tied to tariffs are likely filtering into the housing market, chilling investment demand and limiting hopes for a rebound this spring.

“We still have a bit of a slow market despite the fact that interest rates are coming down and we would expect that’ll continue to worsen as the trade war continues, if it does,” Lee said.

Conservative leader Pierre Poilievre said Tuesday that the construction sector is one industry Trump “does not control in Canada.” He said it should be leveraged against the impact of the trade war.

He told reporters in Ottawa that Canada ought to cut sales tax and remove red tape on new construction to “unleash the biggest homebuilding boom this country has ever seen.”

Lee also said Friday that reducing the GST burden on new homes would help to offset the impact of tariffs on builders.

Canada has responded to Trump’s trade salvos with retaliatory tariffs targeting $30 billion worth of U.S. goods, with billions more in counter-tariffs set to follow in three weeks.

Lee said that if these retaliatory tariffs hit critical construction materials coming from the U.S., they could drive up costs for builders.

The CHBA has asked the federal government to limit the scope of counter-tariffs to either skirt construction materials entirely or focus on products that builders can more easily source outside the U.S., Lee said.

Trump’s tariffs arrived the same morning the CHBA released its third annual Municipal Benchmarking Study, which tracks efforts to reduce homebuilding barriers across Canada.

Cities in Ontario and British Columbia were tagged as the worst offenders when it comes to delaying new home construction approvals and failing to reduce costly development charges.

Lee said that while reducing these barriers is key to addressing Canada’s housing shortage in the long run, municipalities could also “more than offset” higher construction costs tied to tariffs by cutting development charges and speeding up approvals.

CHBA’s latest Municipal Benchmarking Study offered a snapshot of development processes across Canada up to May 2024, and does not analyze the impacts of the federal government’s Housing Accelerator Fund aimed at speeding up the pace of local building.

Lee told reporters Tuesday that the CHBA has seen “pretty dramatic changes” in some municipalities’ development procedures, such as the elimination of restrictive zoning, as a result of the fund.

Source: The Canadian Press / Canadian Mortgage Trends