Economists say most trade is CUSMA-compliant, but housing outlook remains cautious through 2025
Canada may have to settle for a trade deal with the United States that includes some tariffs, Prime Minister Mark Carney acknowledged Tuesday, raising new questions about the ripple effects for Canada’s economy and housing sector.
Carney said in Ottawa this week that past US trade deals under President Trump have consistently included duties, and said there was "not a lot of evidence riht now" that Trump would negitate a deal without tariffs.
Trump's latest move, announced last week, includes a new 35% tariff on Canadian goods starting August 1, an increase from the current 25%, adding to a slate of measures targeting key sectors such as metals, autos, and copper. That’s in addition to a sweeping 50% global tariff on aluminum and steel, and a 25% levy on imported cars and trucks.
While Carney reaffirmed he would only agree to a trade deal “in Canada’s best interest,” he stopped short of ruling out an agreement that includes tariffs. He also left open the possibility of imposing countermeasures if a deal can't be reached.
Most cross-border trade still shielded by CUSMA
Much of the US-Canada trade relationship remains protected under the Canada-United States-Mexico Agreement (CUSMA). Businesses that complete the required certification process for compliance are exempt from additional levies.
“The only thing that you need is as a business, to take the time and money and do the whole procedure to get your CUSMA certification,” Alberta Central chief economist Charles St-Arnaud said in an interview with Canadian Mortgage Professional. “Once you’ve done that, you’re not [seeing] any tariffs.”
That exemption has helped ease some of the pressure on Canada’s export-heavy economy. Based on data from the US Census Bureau, 91% of Canadian exports to the US have entered duty-free since April even as overall trade volumes declined.
No immediate shock to housing
While the tariff environment poses risks to sectors like auto manufacturing and resource exports, analysts say the Canadian housing market is unlikely to face immediate disruption. Still, persistent uncertainty may keep consumer confidence subdued in the months ahead.
There could be a mild uptick in housing activity later this year, driven by buyers who had delayed purchases due to earlier volatility, said St-Arnaud. But the outlook remains cautious.
“Don’t expect a big boom,” St-Arnaud said. “You’re not going to see consumer confidence sharply higher. It will improve, but it will remain at a relatively low level [although] not necessarily consistent with a recession.
“We’ll see some growth but not a strong growth outlook for the rest of the year.”
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