Tariffs, Trade, and Trump:
What Home Owners & Buyers Need to Know
There has been considerable focus in the national media on the ongoing trade dispute between the U.S. and Canada since January 20th.
The fear and uncertainty have many people frozen (figuratively and literally), feeling handcuffed and unable to make life decisions until this looming threat—one that stands to increase our cost of living, devalue the Canadian dollar, and cause job losses—is resolved. After living through the past five years of inflation and rising costs of living (food, housing, and fuel included), it’s understandable that many Canadians are taking a wait-and-see approach in the near term.
People are scared. It makes sense. But we’ve seen this strategy unfold before—specifically, during the previous Trump administration.
Back in March 2018, President Trump announced his intention to withdraw from the North American Free Trade Agreement (NAFTA) and implemented a 25% tariff on steel and a 10% tariff on aluminum, which took effect in June of that year. At the time, President Trump cited concerns over national security as the justification for the tariffs—sound familiar to Trump 2.0?
While Canada responded in kind, the tariffs negatively impacted the Canadian economy and our Gross Domestic Product (GDP), leading to about a 5% decline overall. It took some time, but in May 2019, the U.S. agreed to a new trade deal with Mexico and Canada—the United States-Mexico-Canada Agreement (USMCA). At the time, President Trump played to his voter base, boasting about what a great deal it was for the U.S.
Jump to 2025, and he’s complaining about how bad the deal is for the U.S.—the same agreement his administration negotiated in 2019. Once again, national security is his justification. This approach is nothing new.
What did we learn in 2018 that can be applied today?
- For one, this will be temporary.
- This period of political polarization in Canada could actually bring Canadians together and make us a stronger country.
- It could inspire us to be less dependent on our “big brother” to the south.
- It could show that our government can finally invest in domestic production and create more jobs in the manufacturing and energy sectors.
- Or perhaps we can forge new and more profitable trade relationships with other countries.
- There are positive outcomes to look for in this negotiation.
How might tariffs impact housing in Ontario?
- With increased costs of steel and aluminum, more buyers might opt for resale homes instead of investing in a new pre-construction home from builders.
- With inflation at or below the 2% target, interest rates will continue to drop. Prices will hold steady, not collapse.
- While immigration is expected to slow over the next three years, the backlog for new housing units—caused by the influx of new Canadians post-pandemic—has not yet been addressed. This pent-up demand will counteract any potential negative impact tariffs might have on home values.
- We might not see the price growth many were expecting in the first half of 2025. Home values might stagnate instead before beginning to rise again when a new trade agreement is reached (or once President Trump secures the borders to his satisfaction).
While the media is grabbing attention with jaw-dropping headlines, remember: tariffs are temporary.
As my grandmother used to say, “This too shall pass.” Although her advice was about the struggles of parenting, if you, like me, view President Trump as a full-grown child, then it stands to reason that these tariff threats, too, will eventually fade.
