Tariff war will drive up construction costs on both sides of the border, according to Lyall

New tariffs imposed by Trump on Canadian imports could have a devastating impact on the homebuilding industry in both Canada and the United States, the Residential Construction Council of Ontario (RESCON) said.
“Ontario’s residential construction industry, like many others across the country, are bracing for the impact of the tariffs,” said RESCON president Richard Lyall. “The residential construction industry is already challenged. The move is reckless and will cause economic hardship in both the US and Canada, affecting tens of billions of dollars of trade in construction materials alone.”
Lyall added that the levies will increase material costs, further slow residential construction, and worsen the “already dire housing affordability crisis.”
Impact on homebuilders
The US has announced a 25% tariff on all imports from Canada and Mexico, a move that experts say will drive up prices for critical building materials like lumber, steel, aluminium, and gypsum used for drywall. These essential materials are widely used in home construction, and any increase in their costs will likely be passed down to buyers already facing affordability challenges.
“No one will benefit from an arbitrary increase in material and product prices,” Lyall said in a statement. “Our countries and supply chains are intertwined and dependent on each other, so nobody wins in a tariff war. Homebuilding industries on both sides of the border will be negatively affected.”
Canadian homebuilders rely heavily on US materials, just as American developers depend on Canadian lumber and metals. Canada supplies over 85% of US imported lumber and is the largest foreign supplier of steel and aluminium to the US market.
“Our industry relies heavily on imported materials from the US,” said Lyall. “A tariff war only makes imports more expensive and will add to the cost of building a home. Likewise, Americans will suffer as US homebuilders rely on Canada to fully meet their lumber needs."
The National Association of Home Builders has warned that higher costs could lead to supply chain disruptions, project delays, and even cancellations, particularly as Canadian builders scramble to find alternative sources for materials. While some may turn to domestic or foreign suppliers, the transition could come with significant cost increases and further extend construction timelines.
This isn’t the first time tariffs have created tensions in the housing sector. In 2018, the US imposed levies on Canadian steel and aluminium, triggering Canadian countermeasures on $16.6 billion worth of American exports. Those tariffs remained in place for over a year before both countries agreed to lift them in 2019.
Price spike for homebuyers
Industry analysts warned that the new tariffs could worsen already challenging housing market conditions by exacerbating affordability issues. Builders, facing increased costs, may be forced to pass those expenses on to buyers, driving home prices higher at a time when affordability is already stretched thin.
The budget lab at Yale estimated that the cost of tariffs could lead to an annual increase of $1,900 to $7,600 for U.S. households. Meanwhile, Canada’s homebuilding sector could see fewer projects moving forward, further straining the country’s limited housing supply.
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“The tariffs being imposed by the Trump administration are simply a bad idea and will only cause chaos and higher prices,” Lyall said. “The US action is a high-risk gamble to increase US revenues to offset tax cuts and deflect from other actions being taken by the Trump administration that are unrelated to Canada or Mexico.
“Using tariffs as a hammer will only backfire.”
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