Affordable Housing Development in a Trade War

By Hannah Schneider

For thousands of Canadians struggling to find affordable housing, the news of a possible trade war with the U.S. isn’t just about tariffs. For many, a trade war could be the difference between being housed and unhoused. The economic collateral resulting from blanket tariffs on U.S. imports would significantly impact the work being done across Canada to solve our housing crisis, and these impacts will be felt most by those at risk of homelessness.

I think we can all say we let out a collective sigh of relief on February 3rd when news came out of a 30-day pause to this looming trade war between Canada and the United States. We’ve been called to action to “buy Canadian!” to prepare for this seemingly inevitable economic future.

For those of us in the homeless-serving sector, this uncertainty raises the question: how would affordable housing be impacted by a trade war? Affordable housing developers and operators already work within such tight budgets and narrow margins.

To put it bluntly, a 25% retaliatory tariff on $155 billion in imports means a new affordable housing unit could cost tens of thousands more to build – pushing projects over budget or off the table entirely.

Imagine trying to build a home with a third of your materials suddenly costing at least 25% more. US-imported goods include major construction materials like wood, steel, aluminum, and essential materials for roads, piping, and electrical systems. Glass products, appliances, hardware, and ceramics are among the top homebuilding materials that Canada imports from the U.S. This adds up to $3.5 billion worth of glass products, more than $3 billion in major appliances, and $2 billion in hardware.

I perused the list of products worth $30 billion subject to the initial round of tariffs announced by the federal government to see what the development industry will have to be prepared for. Of the many goods, the following stuck out:

• Plastic flooring and wall coverings, wood flooring and flooring panels, carpeting
• Bathroom needs (Baths, shower-baths, sinks, wash-basins, bidets, lavatory pans, seats and covers, flushing cisterns and similar sanitary ware, of plastics)
• Builders’ plastics (Reservoirs, tanks, vats and similar containers, doors, windows and their frames and thresholds for doors; shutters, blinds, and similar articles)
• Lumber (pine, fir, spruce, oak, beech, maple, cherry, ash, birch, poplar, aspen, tropical woods, etc.)
• Particle board, oriented strand board, fiberboard, plywood, veneered panels and similar laminated wood.
• Posts and beams
• Windows, window frames, doors, door frames
• Shuttering for concrete constructional work
• Shingles and shakes
• Engineered structural timber products
• Appliances
• Construction equipment and tools
• HVAC, fans
• Furniture, mattresses, lighting, lightbulbs

It’s a long list, and not an exhaustive one, as the additional list of imported U.S. products, worth $125 billion has not yet been released. The good news is suppliers now have some time to look for alternative sources, either in Canada or abroad. In the long run, a trade war would force Canada to become more diversified, which can become a good thing. Unfortunately, this would be at significant cost to the development industry and particularly small contractors who are already struggling to recover from the impacts of COVID-19. The bad news is, even if goods are Canadian-made, increased demand for domestically produced goods will still drive up prices.

So, what can be done? Experts such as Kevin Lee, CEO of the Canadian Home Builders’ Association, assert there are immediate measures the government can take to “ease the pain of a trade war if it happens,” such as removing GST on new homes and lowering development taxes. On February 2nd, the federal government announced they would be launching a process so businesses could request exceptional relief from the tariffs. Regarding development innovation, many groups are exploring alternative materials creation and distribution cost-savings. A good first step towards exploring what’s possible is to check out the results of Canada Mortgage and Housing Corporation (CMHC)’s Innovation and Research Funding. Successful projects from the National Housing Strategy Solutions Labs Program and the Affordable Housing Innovation Fund are particularly relevant.

If a trade war between Canada and the U.S. does in fact come to fruition, the affordable housing sector must advocate for tariff relief so that we can continue to create housing for people in need. If we fail to do so, Canada could face a worsened housing crisis within a crisis – one where planned affordable housing becomes unaffordable.