Canada-U.S. trade war will raise the cost of building a home, housing minister says

As Canada braces for U.S. President Donald Trump to impose steep tariffs on Canadian goods, Housing Minister Nathaniel Erskine-Smith says the cost of homebuilding is going to go up — despite an urgent need for more housing stock.

"I'm alive to the concern. The government is alive to the concern. The list of retaliatory measures is alive to that concern," Erskine-Smith said in an interview on CBC's The House.

Canada is staring down the barrel of a trade war with the United States, which could begin early next month. A 25 per cent tariff on most Canadian and Mexican goods was paused until March 4.

The federal government has vowed to impose counter-tariffs if Trump follows through on his threats. Back in February, it published a list of American goods it would target in a counterattack, including kitchen and bathroom appliances and plastic building materials.

Erskine-Smith told host Catherine Cullen that Canada's top challenge is fending off Trump's tariffs. The next biggest challenge, in his view, is building as much housing as possible.

"Those challenges are at odds with one another, because as we see greater uncertainty because of the tariffs, as we see cost increases on certain materials, prices of homebuilding are going to go up. And we need the exact opposite to happen," he said.

In a statement from earlier this month condemning Trump's tariffs, the Canadian Home Builders' Association (CHBA) said counter-tariffs on construction products and materials would "be detrimental to an industry that is struggling in many parts of Canada already."

Brad Carr, CEO of homebuilding giant Mattamy Homes Canada, said he's fearful about the impact of tariffs on the Canadian economy overall. He added the uncertainty around the looming trade war "is creating a pretty big cloud over the housing space right now."

If the cost of building homes goes up, driven by higher prices for items imported from the U.S. like appliances or plumbing fixtures, Carr said his company would "have to pass those through to the buyer."

"We have a lot of stakeholders that we need to cater to — investors, bankers.… So those costs can't be absorbed, particularly at a time when housing is already under a lot of pressure."

Carr said his company would try to find new suppliers and search for other ways "to keep costs down as much as possible."

The CHBA said that Canadian importers in the residential supply chain would need to look at alternatives to U.S. goods after Canada levels its counter-tariffs.

"This will take time, and products will still likely be more expensive than the U.S. goods prior to tariffs, though they may be less than the 25 per cent increase," the CHBA said in its statement.

Carr said Canada is in "a real time of uncertainty" with "lots to be figured out and hopefully lots to be solved before it ever happens.