Trump's declaration that he won't renew CUSMA adds new uncertainty to a housing market already hobbled by trade tensions and a fifth straight Bank of Canada rate hold
Donald Trump's blunt declaration that he is "not looking to renew" the Canada-United States-Mexico Agreement (CUSMA) has sharpened the stakes of a trade review that economists have long flagged as the single biggest near-term risk to Canada's housing market and broader economy.
Trump said on June 10 that he does not intend to renew the agreement, adding: "We don't need anything that Canada has, we don't need anything that Mexico has, but they need everything that we have." The comments came as the mandatory joint review deadline — July 1, 2026 — approaches rapidly, with formal negotiations between Canada and the United States yet to begin.
The timing lands in the middle of an already fragile mortgage environment. The Bank of Canada held its policy rate at 2.25% on June 10, 2026, its fifth consecutive hold, with economists at Scotiabank, RBC, and TD Economics all pointing to CUSMA uncertainty as a key reason why the central bank is unlikely to move before year-end.
The shield that could fall
Canada's economy has so far avoided the worst of Trump's tariff regime largely because of CUSMA's protections. Current US tariffs exempt exports covered by CUSMA, meaning Canada has been spared much deeper trade pain — even if tariffs have battered sectors such as steel, aluminum, and automobile manufacturing.
Charles St-Arnaud, chief economist at Servus Credit Union in Alberta, told Canadian Mortgage Professional earlier this year that the CUSMA review was a more consequential risk than any individual court ruling on tariffs. "We have bigger concerns coming up this summer with the review of CUSMA," he said. "That will be more consequential in terms of what's going to happen with tariffs."
Canada Mortgage and Housing Corporation (CMHC) has also flagged the timing of the review as a compounding risk, noting that its coincidence with the US mid-term elections increases the possibility of non-renewal or a renewal delay. The Crown corporation assumes current tariffs and trade uncertainty will persist throughout its forecast period, projecting that domestic demand and household spending will remain weak from 2026 to 2028.
Housing market caught in the crossfire
Dominion Lending Centres (DLC) chief economist Sherry Cooper has said the CUSMA outcome could make or break Canada's housing market in the second half of 2026, with a large pool of would-be buyers waiting on the sidelines for economic clarity before committing to a purchase. Cooper pointed to interest rates falling and home prices down roughly 10% as conditions favouring a rebound, particularly for first-time buyers who have faced prolonged affordability barriers. But she cautioned that a positive trade outcome alone may not be enough to revive all markets — Toronto's condominium sector in particular faces a supply glut "that's just going to take time to work off."
Bank of Montreal chief economist Doug Porter has said that what Canada's housing market needs most is clarity on the trade front, describing ongoing CUSMA uncertainty as "this really dark cloud" hanging over the economy. RBC Economics has stressed that monetary policy "cannot resolve trade uncertainty or offset the impacts of a trade war," underscoring the limits of rate cuts as a remedy.
Rate hold reinforces caution
TD Economics director and senior economist Andrew Hencic flagged at the June 10 rate decision that CUSMA talks had yet to begin, describing this as a separate source of uncertainty from the Bank's inflation calculus. "Given the competing forces on inflation, we expect the Bank of Canada to stay on hold through the balance of the year," he said.
Scotiabank's Derek Holt characterised the Bank's June statement as a placeholder, noting that roughly 90% CUSMA compliance and Canadian dollar depreciation have so far kept export volumes resilient. RBC's Claire Fan said the Bank would likely remain on hold through 2026 before hiking moderately in 2027 — a scenario contingent on trade tensions not escalating.
Oxford Economics has said it expects the Bank of Canada to hold at its current 2.25% rate through 2026, projecting a return toward a 2.75% neutral rate only in early 2027 if CUSMA talks end constructively — and further cuts if the agreement "falls apart entirely."
For mortgage brokers navigating client conversations, BMO senior economist Sal Guatieri has warned that the cumulative weight of trade uncertainty will likely keep many buyers waiting, noting that it is "the economic uncertainty — both related to the trade war and the Iran war — that will likely keep a lot of buyers" on the sidelines. With CUSMA talks not yet formally underway and Trump's public posture hardening, the July 1 deadline is now a focal point that could reshape the second half of the year for the Canadian mortgage industry and housing market.
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