Uncertainty over trade policies is driving up costs, making it harder to build affordable homes
The growing possibility of a trade war between Canada and the US is already pushing up construction costs, with industry leaders warning that the uncertainty could bring homebuilding to a halt.
Key materials, such as steel beams, cement, and essential appliances, are becoming more expensive, even before tariffs are imposed. The fear of further price hikes has led some builders to delay projects until costs become more predictable.
"The price of steel already went up with the stroke of a pen when Donald Trump announced [tariffs on Canadian steel and aluminum]," said Keanin Loomis, president and CEO of the Canadian Institute of Steel Construction.
High-rise buildings rely heavily on steel, particularly I-beams, which are essential for large-scale residential and commercial projects. Loomis explained that 20-storey building could require thousands of tonnes of I-beams, and most of them are sourced from US steel companies.
"It's a crucial part of a builder's inventory. Nothing can be done without those," Loomis told CBC News.
The uncertainty around tariffs is exacerbating Canada’s housing supply crisis, with the country needing 5.8 million new homes by 2030 to restore affordability, according to Canada Mortgage and Housing Corporation (CMHC). Industry leaders worry the increased cost of essential building materials could slow down progress even further.
Projects on hold
The uncertainty surrounding material costs is already forcing developers to rethink their plans.
"With material costs now increasing, a lot of projects may just be shelved," said Michael Brooks, CEO of the Real Property Association of Canada (Realpac). “I've already heard about projects for new housing being shelved just because of the uncertainty.
"We're already behind in catching up on supply. This will make it worse."
Housing minister Nathaniel Erskine-Smith acknowledged the challenge, saying that increasing tariffs and expanding housing supply “are at odds with one another.” He warned that uncertainty and cost increases “are going to go up, and we need the exact opposite to happen.
Builders, who typically budget projects down to “the last nut and bolt,” now find it impossible to plan ahead, Brooks said. Without clarity on costs, developers may pause or cancel projects, further deepening the housing shortage.
Read next: What's needed to keep homebuilding alive if tariffs arrive?
Another major concern is the ripple effect of layered tariffs, given the deep integration of Canada-US supply chains. Construction materials often cross the border multiple times before reaching final assembly. RBC estimates that Canada imported $7.5 billion in US steel and $9.4 billion in aluminum products in 2024.
Loomis compared the impact to the auto industry, where parts move between countries multiple times before completion.
“That’s fairly similar when it comes to the structural steel industry as well,” he said. “We have a lot of fabricators that do work in the United States. They will source their wide flange, or I-beam, from the United States, then fabricate it here in Canada, and then ship it back to the US.”
This creates the risk of multiple tariff charges on a single product, further inflating costs for Canadian builders. Brooks pointed to products like HVAC systems and appliances, which often use Canadian steel but are assembled in the US before being imported back into Canada.
Challenges in buying Canadian
Some have suggested shifting to Canadian-made materials, but Loomis noted that it’s not a simple solution.
“We’ve been part of a trade regime for many years, and we all have our niche. Canada doesn’t make everything we need, and the US is in the exact same situation,” he said. Adapting domestic manufacturing to produce all necessary construction materials would take “several years and billions of dollars” in investment.
Brooks suggested the government could take steps to ease financial pressures on developers, including reducing interprovincial trade barriers, lowering development charges, and removing GST on purpose-built rental housing. However, he believes the broader uncertainty surrounding Canada-US trade relations will continue to weigh on the housing sector.
“It’s really hard to have confidence with anything that comes from south of the border right now,” he said.
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