1 | A new trade shock arrives just as the market was finding its footing
The Bank of Canada’s April Monetary Policy Report warns that the latest U.S. tariff hikes—and Canada’s “dollar-for-dollar” retaliation—have tilted the outlook toward a shallow recession, even as the policy rate stays on hold at 2.75 % to contain inflation risks. The International Monetary Fund reaches a similar conclusion, cutting its 2025 global growth call to 2.8 % and flagging tariffs as the dominant downside risk. The World Trade Organization estimates the bilateral and global measures will trim world merchandise-trade growth by roughly 0.6 ppts next year.
For property investors, trade policy is no longer background noise—it is a first-order macro variable that feeds directly into demand, financing costs and construction pricing.
2 | Demand side: softer job growth, shakier confidence
-
Residential sentiment has cooled fastest in manufacturing-centric regions. RBC Economics notes that tariff headlines “derailed what was shaping up to be a solid housing-market recovery,” weighing on Southern Ontario resale activity where auto-related employment is most exposed.
-
National house-price growth is already decelerating. Royal LePage’s Q1 survey shows the aggregate home price rising only 1.2 % quarter-on-quarter—well below 2024’s pace—as buyers hesitate in the face of economic uncertainty.
-
Provincial divergences will widen. TD Economics has slashed GDP forecasts “from coast-to-coast,” but Ontario and Alberta—heavy in autos and energy—face the steepest downgrades, a pattern that historically leads to above-average listing inventories and flatter price trajectories.
3 | Supply side: the materials squeeze
Steel and aluminum sit at the epicentre of both the tariff schedule and Canadian construction. Ottawa’s 25 % counter-tariff on U.S. metals, announced in mid-March, mirrors the U.S. move and applies to C$13 bn of imports.canada.ca Altus Group’s latest Cost Guide warns that the trade war adds “material upside risks” to already-elevated input prices, despite recent cost softening in Toronto and Ottawa.canada.constructconnect.com Industry associations concur: the Canadian Home Builders’ Association argues that broader tariff coverage would “further erode affordability in an industry already struggling.”chba.ca
Manufacturers are feeling the bite as well. Alcoa estimates a US$90 million quarterly hit from the aluminum levy on cross-border shipments, a signal that downstream construction products will soon carry higher price tags.reuters.com Independent cost-consultancy models suggest that, taken together, steel- and aluminum-intensive projects could face 4 – 7 % cost inflation in 2025.beckgroup.com
4 | Commercial real estate: winners, losers and the capital-market lens
CBRE’s 2025 Canada Market Outlook still envisions a thaw in investment volumes as pent-up capital re-enters the market, but cautions that “sustained tariffs would weaken Canada’s already low-growth outlook and could lead to an eventual contraction in demand for industrial space.”
| Segment | Near-term risk | Key channels |
|---|---|---|
| Industrial & logistics | High in auto corridors (Windsor, London) | Slower goods flows, higher input costs |
| Office | Moderate | Employment softness in export-oriented sectors may delay leasing decisions |
| Multifamily | Low-to-moderate | Immigration remains a tail-wind, but wage uncertainty could cap rent growth |
| Retail | High | Consumer confidence already fragile; durable-goods sales most at risk |
Large, diversified metros such as Toronto, Vancouver and Calgary still benefit from deep finance and business-services bases that cushion real-estate revenues even when manufacturing and extraction falter.
5 | Regional hot spots to watch
-
Windsor & Southern Ontario Auto Belt – Elevated exposure to U.S. auto tariffs threatens plant output and cross-border freight volumes, pressuring industrial rents and single-family prices.
-
Saint John & Saguenay – Energy and aluminum hubs sensitive to commodity-price swings amplified by trade disruptions.
-
Edmonton & Calgary – Oil sands operations face weaker export demand, yet robust white-collar sectors could keep office-vacancy spikes in check.
-
Greater Vancouver – Port activity may slow, but diversified employment and structural supply shortages limit downside for housing values.
6 | What property stakeholders should do next
| Stakeholder | Tactical actions |
|---|---|
| Developers & Builders | Lock in forward contracts for steel/aluminum; revisit contingency budgets; explore modular techniques to cut material intensity. |
| Investors & Lenders | Stress-test rent and cap-rate assumptions under a 50–100 bp GDP shock; overweight resilient asset classes (multifamily, last-mile logistics in service-led metros). |
| Policy-makers | Accelerate housing-supply approvals to offset tariff-driven cost spikes; consider targeted tax credits for purpose-built rental to sustain construction pipelines. |
| Corporate occupiers | Diversify supply chains and inventory buffers to avoid production stoppages that could impair lease commitments. |
7 | Bottom line
Trade wars rarely create outright winners, and Canadian real estate is no exception. The combined effect of slower GDP growth, fragile consumer sentiment and rising construction costs will temper price appreciation and delay projects in the most trade-exposed regions. Yet the sector’s structural supports—population growth, constrained urban land supply and a prudent banking system—remain intact. For investors who calibrate risk by geography and asset type, the coming period is less a crash course and more a course correction.
Staying alert to headline-driven policy shifts, and building flexibility into underwriting models, will be the best hedge until the tariff dust settles.