Every Canadian is likely aware of President Trump’s threat to impose tariffs on goods coming from both Canada and Mexico. While many initially thought that he wasn’t being serious, months later he is sticking to this promise. While the stated motivation for these tariffs was the lack of sufficient control at and of our borders and our failure to maintain military spending at our promised levels, legitimate concerns, many fear that this new obstacle is being imposed by President Trump as part of his “America First” mindset. Through this, he intends to protect American industries and encourage American citizens to buy American.This policy will make Canadian and Mexican-produced goods more expensive for the American consumer until a domestic alternative for them is found. (Classic import substitution. Short term pain, for long term gain?) However, American citizens are not the only ones who will be harmed by this policy. CTV News cites Moshe Lander, an economics professor from Concordia University in Montreal, who states that the 25% tariffs on Canadian goods can be the tipping point for a recession in the Canadian economy, if we aren’t there already. We will speak more strongly; they will be the tipping point. The USA depends on Canada for a large number of goods; they get 80% of their oil from us, and their auto, energy, and agriculture industries are heavily dependent on Canada; which means that we depend on them to be a significant customer. CTV also cites the Vice President of the Business Council of Alberta, Scott Crockatt, who says up to 150,000 Canadians could end up out of a job from this policy.&nbsp;It should be no surprise that this policy move will exacerbate the cost-of-living crisis for both Canadians and Americans. When our entire economy is threatened, so is the housing market. Storeys points out that the job loss following the imposition of tariffs on Canadian goods will consequently result in less people able to buy homes. Given the number of young people who are already struggling to get their foot in the door of the housing market, we can only imagine how much worse this could become with an added issue. Secondly, Storeys says that if Canada were to retaliate with counter tariffs, this will make things even worse for the housing market by exacerbating the existing cost of building crisis by increasing prices of building materials and therefore houses. Where builders cannot make a profit, they will pass the expenses on to homebuyers, a challenge that will halt building and make properties more expensive.&nbsp;Storeys also explains how the interest rates and housing demand would decrease. They state that the Bank of Canada would likely continue to decrease interest rates as they have been doing recently in the already existing housing crisis as a way to make housing slightly more affordable. They explain, however, that the benefits of the interest rate cuts would likely be offset by the expected job loss and reduced consumer spending. These moves would also impact an already weak Canadian dollar. Given the domestic concerns being faced, we believe that the Bank of Canada will accept the potential inflationary impacts of a weaker C dollar, that will be muted given an economic forecast, and allow the C dollar to weaken further.Last week, we spoke about the weak Canadian dollar and how that may encourage Americans to invest in Canadian property. When you add retaliatory tariffs from Canada to the equation, this may actually deter foreign investors. Where houses cost more for everyone, the potential benefits we saw for foreign investors without the increased costs associated with tariffs are likely to be offset by the negative effects of retaliation. They will still get a “discount” for their American dollar compared to Canadians, but they can expect to pay more in general while residing here.Alex Lo, a columnist for the South China Morning Post, recently penned an opinion piece titled; “A Conservative Canadian PM is likely to worsen tense China ties”. We completely disagree and encourage readers to reject this influence. It is in fact our greatest opportunity to fix things domestically and internationally through a change of government and with it a new approach to taxation, trade and spending.As we have discussed, the tariffs imposed by the USA, and potentially our tariffs imposed in retaliation, will have negative impacts on the economies of both countries involved. When an economy corrects, the housing market corrects along with it. Whether these are simply threats with no intention to act, or whether President Trump means what he says, we can imagine that neither side fully understands what we could be getting ourselves into.&nbsp;This said, it will hurt us more than it will hurt them. We need to urgently act and turn this obstacle into an opportunity. With the right approach and leadership, there will be no tariffs imposed from either side, we will open up new trade, have a safer and more secure country, and develop a taxation regime in Canada that allows hard work and innovation to flourish. That will be good for Canadians; and for the housing market.&nbsp;

President Trump’s Proposed Tariffs: What They Could Mean for Canada’s Housing Market

Find out how President Trump's proposed tariffs could impact Canada's housing market, from rising costs to economic uncertainty, and what it means for Canadians.

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