The construction and development industry in Canada is facing an unprecedented challenge. With the recent imposition of a sweeping 25% tariff on Canadian goods by the U.S., the cost of construction materials is set to rise sharply, threatening project feasibility, affordability, and the broader housing market. Builders and developers who are already contending with labour shortages, interest rate fluctuations, and supply chain bottlenecks now face another major disruption—one that could slow construction, drive up home prices, and create financial strain across the industry.

This special report explores the real-world impact of these tariffs on the construction sector, focusing on their effect on housing prices, land values, supply chains, and alternative solutions that could help mitigate the damage. By drawing insights from a collection of expert sources, including industry reports, news analysis, and economic forecasts, we aim to provide actionable intelligence to help builders, developers, and policymakers make informed decisions in this rapidly evolving landscape.

What This Report Covers

1. Housing Prices & Land Values

How rising material costs could make homes more expensive and impact affordability.
Why development land values might soften in the short term but could rebound as policy responses unfold.
How supply constraints could put additional upward pressure on home prices.

2. The Construction Industry Under Pressure

Which construction materials will be most affected (steel, aluminum, lumber, and finishing materials).
How builders and developers can expect higher costs, longer project timelines, and tighter profit margins.
Why some projects may be delayed or canceled due to unfeasible cost escalations.

3. Supply Chain Disruptions & Alternatives

Which parts of the construction supply chain will face the biggest disruptions.
How Canadian suppliers that previously exported to the U.S. could redirect sales to the domestic market.
The role of alternative trade agreements (CETA, CPTPP) and new international suppliers in stabilizing costs.
Key industries and companies that are most vulnerable to the tariffs—and how they can pivot to avoid major losses.

4. Offsetting Cost Increases

How lower interest rates and Bank of Canada policies could soften the financial impact of tariffs.
How more efficient intraprovincial trade and the removal of interprovincial barriers could help maintain supply stability.
What government interventions (tax breaks, subsidies, infrastructure stimulus) might be deployed to ease financial pressure on builders.

5. Sourcing Construction Materials in a New Trade Reality

A detailed look at where construction materials in Vancouver and B.C. originate from and which supply chains will be hit hardest.
How builders can shift to alternative suppliers in Europe, Asia, and within Canada itself.
How long it could take for new supply chains to become fully operational—and what temporary shortages or cost surges to expect in the meantime.

Why This Report Matters

The construction industry is the backbone of Canada’s housing market and urban development. Builders and developers must now contend with an economic landscape that has shifted overnight, threatening to slow down new housing production and increase costs for buyers. Understanding the full scope of these tariff-driven disruptions will allow industry professionals to adapt quickly, find new supply sources, and leverage financial and policy tools to weather the storm.

This report synthesizes insights from multiple authoritative sources to provide a comprehensive, strategic analysis of what lies ahead. By connecting key trends, trade data, and expert perspectives, we aim to equip industry leaders with the knowledge and foresight needed to navigate this period of uncertainty successfully.

With construction costs set to rise, supply chains under stress, and new trade routes emerging, the ability to adapt and act decisively will determine who thrives in this challenging environment.

Okay, let’s dive in.

Housing Prices & Land Values

Trump’s 25% tariffs on Canadian goods will raise construction costs and slow the pace of new housing development. In Metro Vancouver – already facing a housing shortage – higher material costs mean some projects will be delayed or canceled, limiting new supply. Fewer homes coming to market will keep prices elevated, as demand outstrips the constrained supply of new units. Developers are likely to pass added costs onto buyers rather than absorb them, pushing home prices upward in the region. Renovations and secondary suite additions would also slow, tightening the rental market and putting additional pressure on housing affordability. In short, tariffs that “bloat costs at every level of the housing supply chain” threaten to worsen Vancouver’s affordability crisis.

Broader land values across B.C. could see mixed impacts. In the short term, development land may soften in value as builders “re-think project timelines or even cancel builds” due to cost spikes. If projects are put on hold, demand for raw land and redevelopment sites would dip, potentially dampening land price growth in those areas. However, prime residential land in built-up markets might hold its value or even rise, since fewer new homes keep overall supply tight. Economic uncertainty from a trade war could cool speculative land buying, but any slowdown is expected to be temporary. Economists note that once the shock passes and policy responses kick in (like interest rate cuts), housing activity could rebound strongly, restoring confidence in the real estate market. In fact, the Bank of Canada has already signaled readiness to cut rates if needed, which would lower mortgage costs and help counteract tariff-driven price pressures. Overall, housing prices in Vancouver are likely to face upward pressure from reduced supply, while land values may stagnate in the near term for development sites but should recover as conditions stabilize.

Construction Industry Impact

Construction materials and supplies most affected: The tariffs hit a wide range of building inputs, with steel and aluminum being prime targets. A 25% duty on imported steel will drive up costs for structural beams, rebar, and nails, and the same rate on aluminum will affect everything from window frames to siding. Lumber is also in the crosshairs – softwood lumber was already subject to ~20% duties, and higher tariffs would exacerbate those costs. Beyond these basics, many finishings and fixtures are impacted. Canada imports billions in construction products from the U.S., including glass, major appliances, hardware, and ceramics, all of which would become more expensive. For example, Canada brings in $3.5 billion in glass, over $3 billion in appliances, and $2 billion in hardware from the U.S. annually. These tariffs will directly inflate the cost of those items. Essential mechanical and electrical components for buildings are also at risk – many big-ticket items like elevators and HVAC systems are sourced from the U.S., and their prices would jump immediately. In summary, core structural materials (metal, lumber) as well as key building systems and finishes (windows, equipment, appliances) are the most affected segments.

Duration of effects: The cost increases would be felt immediately and could last as long as the tariffs remain in place. In the 2018 tariff episode, U.S. steel/aluminum duties stayed in effect for roughly one year (June 2018 to May 2019) before a deal ended them . If this new round of tariffs persists without a quick resolution, higher material costs could linger for many months or even years, until a trade agreement is reached or tariffs are lifted. There is some hope that market adjustments might soften the impact over time – historically, foreign exporters eventually lowered prices to stay competitive, reducing the net effect on prices after the initial shock. But that adjustment can take time, and in the interim builders face significantly higher input costs. Industry experts estimate the tariffs could boost overall construction costs by around 6–8% in the near term. For context, a Vancouver developer noted that after a period of stable construction costs, the tariff announcement caused an abrupt 6–8% jump in costs on new projects . This kind of increase in such a low-margin industry is substantial.

Impact on construction costs, timelines, and profitability: Higher material prices squeeze construction budgets. Contractors and developers may need to delay projects while reworking budgets or wait for price volatility to settle. Some projects could become financially unfeasible and get shelved. The Residential Construction Council of Ontario warns that these tariffs “will only increase costs and lead to a further slowdown in residential construction,” worsening the housing crunch. Development firms in B.C. echo this – many have put investment on pause amid the uncertainty, effectively delaying development for months until the outlook improves. Tight profit margins in development mean that a cost surge often can’t be fully absorbed: if subcontractors and suppliers pass on their higher costs, project margins shrink or vanish. Builders would either raise sale prices (which the market may not always bear) or halt the project. As one Vancouver builder explained, “if margins get tighter, you’re putting in more equity to make less – developers will not do that, and investors definitely won’t fund projects with unquantifiable returns”. In practice, this means construction could slow dramatically. Ongoing projects might stretch out timelines as builders hunt for cheaper materials or wait out price spikes. New projects could be canceled or postponed, as evidenced by developers treating the first half of 2025 as essentially a “write-off” until tariff impacts are clearer. Profitability in the construction industry will suffer: contractors locked into fixed-price contracts could incur losses if they didn’t hedge against material cost increases, and developers will see thinner returns on projects started during the tariff period. Overall, expect construction costs to rise across the board and development timelines to lengthen, eroding the industry’s profitability for as long as the 25% tariffs are in effect.

Supply Chain Disruptions & Alternatives

Biggest supply chain disruptions: The construction supply chain between the U.S. and Canada is highly integrated, so a broad tariff will disrupt multiple links. Cross-border metal supply is a major concern – Canada is the single largest foreign supplier of steel and aluminum to the U.S., and much of Canada’s steel output (50–60%) normally ships south. A 25% tariff walls off this market. Canadian steel mills will suddenly have excess stock, and U.S. builders will scramble for new sources. This disrupts the flow of critical items like structural steel beams, rebar, steel studs, and fasteners. Canadian builders, meanwhile, could face reduced domestic supply if Canadian mills scale back production due to lost exports. One industry CEO noted that when export demand falls, mills often shut down lines, “driving up prices” for domestic buyers due to reduced supply. We may “see this in the lumber industry,” he added – if U.S. demand for Canadian lumber drops, some sawmills will close, ironically raising lumber prices in Canada despite an initial oversupply. The softwood lumber supply chain is already strained by existing U.S. duties, and Trump’s tariffs would cut exports further. B.C. lumber producers (who supply nearly half of Canada’s softwood) would face a significant oversupply at home – a 25% tariff is likely to reduce BC’s lumber exports to the U.S., leaving more wood in the province. Initially this glut could push lumber prices down in BC , but if mills can’t remain profitable, they may curtail production, which would then tighten supply and push prices back up. Either scenario – oversupply or shutdown – is painful: forestry communities risk job losses, and builders face either volatility or eventual price hikes. BC’s premier has called the prospect of tripled lumber duties plus new tariffs a “massive threat” to the province’s forestry sector.

Other parts of the chain at risk include manufactured building components and systems. Many mechanical systems, electrical fixtures, and finishing materials cross the border. For example, elevators and large HVAC units in Canadian high-rises often come from U.S. factories – those could face delays or surcharges. Glass and glazing systems for curtain walls, specialty cladding, and high-end finishes frequently come from U.S. suppliers or are routed through the States, and a tariff would jolt those supply lines. Even basic supplies like drywall have been an issue in the past: Western Canada relied on U.S. drywall imports, and a sudden tariff in 2016 (in that case, anti-dumping duties) caused a 276% duty shock, leading to material shortages and price spikes until local production was ramped up. Similarly, Canadian construction firms now worry about gypsum products and other goods that might be hit in a retaliatory spiral. In short, any building supply chain element that previously optimized for free trade – from lumber and engineered wood (much of BC’s engineered timber is exported to the U.S.) to pre-fabricated modules or finishing materials – will face turmoil. Expect shipping delays, material scarcities, and re-sourcing challenges in everything from structural steel to kitchen appliances.

Redirecting exports to Canada or new markets: Canadian companies that can no longer sell to the U.S. will look for alternative buyers. In the steel industry we have a clear precedent: during the 2018 tariffs, Canadian metal producers didmanage to re-route exports to other markets like Mexico, the UK, and China. While the U.S. bought far less Canadian steel (exports to the U.S. fell 41% under those tariffs), Canadian mills partly cushioned the blow by expanding sales elsewhere. We can expect a similar pivot now. For instance, Canadian steelmakers may intensify sales to Europe (taking advantage of Canada’s free trade with the EU) or to fast-growing Asian markets. Aluminum producers (concentrated in Quebec and BC) might redirect volumes to Asia or back into Canada for domestic manufacturing, since aluminum is globally traded (notably, aluminum exports were less affected last time, dropping ~19% versus the U.S. ). Lumber companies in BC will likely try to sell more into Asia – BC already ships a lot of softwood to China and Japan, so they have infrastructure to send surplus there. This could somewhat offset lost U.S. sales, though prices might be lower in those markets.

Companies may also turn inward to Canada. A supplier that previously prioritized U.S. orders might now focus on Canadian clients. For example, a Western Canadian rebar manufacturer that competed with U.S. imports will find a captive market at home if U.S. rebar is expensive. Likewise, a Canadian window or glass producer might see new opportunities if U.S. imports become cost-prohibitive. In some cases, U.S. suppliers will seek Canadian buyers too – since the tariffs apply to Canada/Mexico going into the U.S., a Mexican cement or steel producer facing a U.S. barrier could market more aggressively in Canada. (Notably, Canada and Mexico still have free trade, so Canadian buyers could import Mexican materials tariff-free, potentially at a discount if Mexico has surplus). This redirection has limits – the Canadian market is smaller than the U.S. – but it can mitigate some pain. It also means Canadian builders might suddenly have access to deals from domestic or non-U.S. suppliers. For example, if U.S. demand for Canadian engineered wooddrops, Canadian builders might source those materials more cheaply from companies like Structurlam or Nordic, which otherwise would be busy exporting. The shift in trade flows will take some adjustment, but companies are already exploring these moves. In 2018, despite the turmoil, U.S. imports of tariffed steel actually rose slightly as suppliers from Canada (and Europe and Mexico) found workarounds and U.S. buyers rushed purchases. This suggests that determined exporters will find pathways (like redirecting through subsidiaries or using temporary duty exemptions), at least in the short term.

Alternative trade agreements or suppliers: Canada is not without options to stabilize the market. Several free trade agreements provide alternatives. The CPTPP (Trans-Pacific Partnership) opens trade with Pacific Rim countries – Canada could import more steel, cement, or lumber from partners like Japan, South Korea, or Vietnam to replace U.S. sources. The CETA deal with Europe allows EU construction materials to enter Canada tariff-free. European suppliers (for example, steel from Germany or rebar from Turkey – which is outside the EU but often exports via Europe) could step in to supply Canadian projects. These agreements mean that while U.S. goods become pricier, Canada can pivot to international suppliers who face no Canadian tariffs. Of course, capacity and logistics matter: not all foreign producers have ready distribution in Canada. But if demand is there, new supply lines can be forged. We might see, for instance, European glass manufacturers supplying curtain wall systems to Vancouver, or Asian factories shipping finished kitchen cabinets directly to Canadian builders, filling the gap left by U.S. products.

Within North America, Mexico is a key alternative supplier. Mexico produces a lot of cement, steel (and steel products like studs and beams), and appliances. If Mexican goods are also tariffed by the U.S., Mexico will have strong incentive to sell more to Canada (where they can do so freely under the USMCA). This could help Canada alleviate shortages. For example, if U.S.-made refrigerators become expensive, Canadian retailers can increase orders from Mexican appliance plants. Similarly, Mexico is a major source of gypsum (drywall) and concrete products for the U.S.; those suppliers might start courting Canadian buyers to make up lost volume.

On the policy front, the ultimate resolution could come through a renegotiated agreement. The tariffs are a pressure tactic; one alternative path is an updated trade deal (much like how the USMCA replaced NAFTA). Canada could seek an exemption or quota arrangement with the U.S. – for instance, a deal to remove tariffs if certain import thresholds aren’t exceeded. Until then, Canada’s focus is on damage control. Strengthening domestic trade is one strategy: the federal government has explicitly included removing interprovincial trade barriers as part of its response. By making it easier for one province to buy from another, Canada hopes to use its internal supply chain to fill gaps. As the Canadian Chamber of Commerce noted, “we can do work at home so we’re not as reliant on the U.S. market”, and fixing internal barriers could offset some of the tariff damage over time. For example, if Ontario steel can’t go south, it could be redirected to western provinces more easily if interprovincial trucking rules and standards are harmonized.

Most affected suppliers/industries (examples): The Canadian steel industry is arguably hit hardest – it exports the vast majority of its product to the U.S., so losing that market is dire. Steel executives have called this scenario “doomsday”, as 99% of Canadian steel exports go to the U.S. in some segments. Companies like Algoma, Stelco, and ArcelorMittal Dofasco (all major Ontario steel producers) would need to slash production or find new foreign buyers fast. The aluminum industry (e.g. Rio Tinto’s smelters in BC and Quebec) also takes a hit, though global demand for aluminum might make it easier to pivot to Europe or Asia. Forestry companies in B.C. – e.g. Canfor, West Fraser – are extremely exposed; they’ve weathered years of U.S. softwood lumber duties, and an extra 25% tariff plus potential duty increases (nearly 27% total, as proposed) will strain their operations. Mill curtailments and layoffs are a real risk, as Premier David Eby warned. This not only hurts those communities but could disrupt downstream industries (like engineered wood producers and builders who rely on those wood products). On the import side, Canadian distributors of U.S. building products will be shaken. For instance, firms that import American-made windows, doors, or cabinetrymight see orders dry up or costs surge; they’ll need to source elsewhere or risk losing business. The home appliance industry in Canada (largely import-based) will see shifts – U.S. brands may lose market share to Korean or European brands if tariffs make them too pricey. Even niche sectors like flooring and finishes are touched: Canada’s counter-tariffs are slated to hit things like vinyl flooring, carpeting, and wood panels from the U.S., meaning importers of those goods (and the renovation industry at large) will scramble for alternatives. As a case in point, Ontario’s home builders fear that housing construction will become “collateral damage” in this trade war, with higher input costs pricing out families from new homes. All told, the most affected players are those whose supply chains were tightly bound to cross-border trade: steel and lumber producers, and construction material importers, along with the builders who rely on their products.

Offsetting the Cost Impact

While tariffs raise costs, there are measures that can offset the impact on builders and consumers:

Lower interest rates: One powerful counterweight to rising construction costs is falling interest rates. As the trade dispute intensifies, the Bank of Canada has adopted a more dovish stance. In fact, the BoC has already cut its key rate multiple times in anticipation of economic fallout, bringing it down to 3% . Central bank officials warn that a trade conflict “could be very disruptive” to the economy , implying they are prepared to further reduce rates if needed. Cheaper borrowing costs help in two ways. First, developers and builders benefit from lower financing expenses on construction loans – this can partially offset higher material prices. If interest on a multi-million dollar construction loan drops even 1-2%, it frees up funds that can cover some of the tariff-inflated costs of steel or lumber. Second, lower rates support housing demand – mortgages become more affordable, which keeps home sales moving even if prices rise, allowing builders to pass on some costs. Essentially, rate cuts act as a stimulus: they can soften the blow of tariffs by boosting overall economic activity and housing affordability. Economists predict that if the tariffs dent growth significantly, the BoC would respond aggressively, potentially “slashing interest rates” and pulling Canada out of a downturn faster. This is a bit of a silver lining for the housing market – as one analyst put it, a badly injured economy would force mortgage rates down, a “lifeline for homebuyers” that could unleash pent-up demand and aid a recovery. In summary, monetary policy easing is a key tool to mitigate tariff pain.
Increased interprovincial trade: Strengthening trade within Canada is another strategic response. The federal government has explicitly included the removal of interprovincial trade barriers in its tariff counter-measures. By making it easier for provinces to trade with each other, Canada can better utilize domestic surpluses and shortages, reducing reliance on the U.S. For example, if a project in B.C. needs steel and U.S. imports are too costly, it would ideally source from Ontario or Quebec mills. Currently, various barriers (different standards, transport regulations, etc.) make east-west procurement more cumbersome than it should be. Ottawa is looking to streamline these – as Foreign Minister Mélanie Joly said, preventing internal trade barriers is now part of the solution to Trump’s tariffs. Over time, a freer internal market means a builder in Vancouver could buy materials from, say, Ontario or Alberta as easily as from Washington State, creating more options and competitive pricing. This won’t happen overnight, but even symbolic moves (like provinces aligning building codes or trucking rules) can improve supply flows. Some premiers are championing a “Buy Canadian” or at least “Buy other province” approach to keep money and business circulating domestically. The Canadian Chamber of Commerce notes that working on internal trade can “offset the risk or damage” from U.S. tariffs in the long run. So, while not an immediate fix, boosting intraprovincial and interprovincial trade is a resilience strategy – it makes Canada’s supply chain more self-sufficient and less prone to foreign tariff shocks.
Government fiscal support & policy relief: Both federal and provincial governments are eyeing measures to support builders and developers through this period. One approach is to lower other costs in the building process. The Canadian Home Builders’ Association (CHBA) has urged policymakers to consider removing the GST (Goods & Services Tax) on new homes, and to reduce or defer hefty development charges that municipalities levy. Eliminating the 5% GST on a new home, for instance, could offset a chunk of the cost increase from tariffs, effectively acting as a rebate to buyers or developers. Some of these ideas were already floated to improve housing affordability, and the tariff situation adds urgency. Additionally, governments could provide direct relief similar to pandemic programs. In late January, reports suggested Canada was considering “pandemic-like relief” to industries hit by Trump’s tariffs. This might include emergency loans or grants to construction firms, wage subsidies to keep workers employed on projects, or tax credits for using Canadian-made materials. Another avenue is infrastructure stimulus: provinces might ramp up public infrastructure projects and ensure procurement favours Canadian suppliers, to keep domestic production going despite export losses. Ontario’s government, for example, indicated it would work with the Ontario Home Builders’ Association to “minimize impacts” on residential construction. This could mean targeted subsidies or fast-tracking projects to keep builders busy. The OHBA has even suggested exempting certain housing-related products from Canada’s own retaliatory tariffs, so that critical inputs (like U.S. lumber or certain metal products) don’t get even more expensive in Canada. The idea is to shield the housing supply chain from the worst of the crossfire.
Finally, there’s the diplomatic track: Canada’s policy response includes negotiating firmly with Washington. The tariffs are meant to be leverage, and Canada has responded with dollar-for-dollar counter-tariffs to pressure a return to the table. The sooner a new agreement (or the removal of tariffs) can be reached, the sooner normalcy can return to the construction sector. In sum, governments are looking at mitigating cost increases (via tax breaks and subsidies), ensuring financing and demand remain robust(via rate cuts and stimulus), and resolving the trade war through negotiation – all to blunt the impact on builders, developers, and homebuyers.

Sources of Building Supplies: Current and Alternatives

Vancouver and B.C. builders source their construction materials from a mix of domestic, U.S., and overseas suppliers. Here’s a breakdown of key supply sources and potential alternatives in light of lost U.S. trade:

Wood products: B.C. is fortunate to have a large domestic lumber industry. The province’s framing lumber is largely supplied by local sawmills in the Interior and coastal BC – in fact, B.C. exports lumber to the U.S., not the other way around. Thus, basic wood framing supplies (2x4s, plywood, OSB panels) for Vancouver projects will remain available, and in the short term there may even be an oversupply of lumber in B.C. as exports are curtailed. This could temporarily make wood cheaper locally. However, specialty wood products could be affected. For example, engineered wood beams and joists are produced both in Canada and the U.S.; if Canadian demand for these rises (because U.S. supply is pricier), local manufacturers like Tolko or Weyerhaeuser’s Canadian plants may need to increase output. Builders could also look to European timber (e.g. glulam beams from Austria or Germany) which can be imported under CETA with no tariff. Some large developers might source finished timber components from Europe if they become cost-competitive.
Concrete and cement: This is usually sourced intra-provincially or regionally. Metro Vancouver has local cement plants (e.g. Lafarge in Richmond) and aggregate quarries, so concrete supply is mostly local. Canada does import some cement, but the U.S. is not a huge supplier to B.C. (most U.S. cement exports go to closer markets like Eastern Canada or import-dependent regions). Thus, cement and ready-mix concrete in B.C. should see relatively minor direct impact from U.S. tariffs. If anything, a slowdown in U.S.-bound cement exports from Canada could leave more supply for domestic projects. In cases where specialized concrete products (precast panels, certain admixtures) are bought from the U.S., alternatives include domestic manufacturers in Alberta/Ontario or suppliers from Asia. The construction industry can also adjust by using different building methods – for instance, if steel is very costly, builders might opt for more concrete structure in mid-rise buildings (provided cement remains affordable). Canada’s self-sufficiency in cement means local suppliers can fill the gap if imports falter.
Metal products (steel, rebar, aluminum): B.C. does not have large steel mills for structural shapes; it traditionally imports these from the U.S. (Northwest states) or Asia, or sources from Eastern Canada. With U.S. steel now pricey, alternative suppliers will step in. Eastern Canadian mills (in Ontario) could send more steel westward if transportation is arranged – interprovincial trade improvements would help here. Internationally, Asian steel (from countries like South Korea, Japan, or even China) can supply rebar and beams. In fact, Western Canada has in the past imported rebar from Asia when domestic supply was insufficient (though anti-dumping tariffs have applied to some countries). Under the CPTPP trade pact, steel from countries like Japan comes in tariff-free, making it an attractive substitute. It may take a few months for procurement teams to set up new import lines from Asia or Europe, but it’s feasible. Aluminum for construction (extrusions for window frames, curtain walls, etc.) is produced in Canada (notably by Hydro & Rio Tinto in Kitimat, BC and Quebec), so builders might increase purchases of Canadian-made aluminum components if U.S. ones are costlier. Canada could also import more raw aluminum from overseas (the UAE or EU) if needed – globally, aluminum is abundant. For reinforcing steel (rebar), which is critical for concrete construction, B.C. currently gets supply from Alberta’s AltaSteel and imports. If U.S. rebar faces a 25% duty, suppliers from Turkey or Vietnam (major rebar exporters) could fill the market via ports in Vancouver. Canadian trade safeguards might need adjusting, but policymakers could choose to allow more offshore steel in to prevent shortages. In summary, domestic and overseas metal suppliersare poised to replace U.S. metals: it’s a question of logistics and perhaps government easing import quotas.
Mechanical and electrical systems: Many advanced building systems in Vancouver’s construction come from the U.S. – for instance, elevator systems (Otis, KONE), HVAC units (Carrier, Trane), and electrical switchgear often are made or sourced through U.S. divisions. With tariffs, these will cost more. In the short run, some builders have pre-purchasedcritical U.S. equipment before tariffs fully bite. For now, that ship has sailed. Longer term, builders will seek alternatives: European and Asian manufacturers can provide many of these products. For elevators, companies like Germany’s ThyssenKrupp or Japan’s Mitsubishi could supply Canadian projects if American suppliers falter. HVAC equipment can be sourced from European brands or increasing imports from Mexico (where many U.S. brands manufacture – those Mexican-made units might bypass U.S. tariffs if sent directly to Canada). There could be some project delays in procuring big-ticket mechanical items as new supply chains are established, but diversification is possible. In fact, industry experts say suppliers are “already starting to look at alternative sources” globally in anticipation of the tariffs.
Finishes, fixtures, and appliances: Vancouver’s builders rely heavily on imported finishes – things like lighting fixtures, plumbing fittings, kitchen appliances, flooring, and specialty glass. A large share of these imports comes from the U.S. or via U.S. distribution channels. With tariffs, we’ll likely see a shift to direct international sourcing. Major appliances are a good example: Many brands (GE, Whirlpool) are U.S.-based and would be tariffed, so Canadian retailers will turn to alternatives. South Korea’s LG and Samsung have factories in Mexico and Asia that can ship to Canada; European brands (Bosch, Miele) can also increase shipments. The CHBA notes Canada imported $3.5B in glass products, $3B in appliances, and $2B in hardware from the U.S. last year – all of these have substitutes. Glass for windows can be bought from India or China; hardware (like fasteners, door handles) can come from Asian manufacturers (many of which already supply big-box stores in North America). It may take a bit of time for local distributors to pivot – for instance, ordering a large volume of European windows to meet a project spec could have a lead time of a few extra months versus U.S. suppliers. But if tariffs persist, importers will establish new supply lines within a few months to a year. There could be an interim period of spot shortages – perhaps a contractor finds a certain type of American-made roofing material is suddenly scarce until they source it from elsewhere. However, Canada’s openness to trade means alternative suppliers from Asia, Europe, and within Canada are ready and able to step in.

How long to shift suppliers: Adjusting the supply chain is not instantaneous. For commodities like lumber or base metals, the shift can be relatively quick – global markets will redirect flows in a matter of weeks. (For example, after the 2018 tariffs, U.S. buyers initially paid more for steel, but within months foreign exporters lowered prices and found new ways to sell, and Canadian producers rebalanced exports to other countries.) So, for bulk materials, we could see new suppliers in place within a quarter or two. However, for more complex or custom products, it could take longer. If a builder needs to find a new elevator supplier, they have to go through design approvals and ensure compatibility – that might delay that aspect of construction by a few months. Building new domestic capacity (if, say, Canada decided to produce its own drywall or steel beams to replace U.S. imports) takes even more time – often 1-2 years to get a new plant up and running. The hope is that most of the gap can be filled by existing producers elsewhere rather than having to build from scratch. A historical case illustrates this: when Western Canada was hit with the drywall tariff in 2016, prices spiked sharply (by 30% or more) and it took several months for the market to adjust. Eventually, CertainTeed Canada boosted production at its Vancouver and Winnipeg drywall plants, hiring additional workers and adding shifts to meet regional demand. This stabilized supply and mitigated further price increases, but consumers and builders had to swallow higher costs in the meantime. Similarly, if these new tariffs stay in place, we can expect a rough few months of adjustment – projects might temporarily pay more for substitute products or face delays until new suppliers are lined up. By later 2025, the supply chain will likely have reoriented: Canadian companies will be dealing with a more diverse set of suppliers (and perhaps more domestic input) to keep construction moving. In the long run, this diversification could be healthy – as one real estate CEO noted, being forced to diversify might make Canada’s economy more resilient and “more diversified for the longer term, which is a good thing”. But in the near term, the shift is challenging. Builders and suppliers will need to be nimble in finding alternatives and possibly redesigning projects (using different materials or specs) to work around any shortages. With a concerted effort – and supportive policies – the construction supply chain in B.C. can adapt to the new tariff reality, ensuring that building continues, albeit at a somewhat higher cost and slower pace until stability returns.

Navigating the Storm: Executive Summary and Conclusions

Today’s imposition of a 25% tariff by President Donald Trump on imports from Canada and Mexico is poised to have significant repercussions on Vancouver’s housing market and the broader construction industry. Tariffs are expected to raise the cost of construction materials imported from the U.S., such as lumber, steel, and aluminum. These materials are integral to residential construction, and heightened costs could lead to increased prices for new homes. Builders may pass these additional expenses onto consumers, thereby exacerbating housing affordability challenges in Vancouver.

Effects to Monitor

Several potential effects warrant attention:

• Material Cost Escalation: Anticipate increased prices for construction materials sourced from the U.S., leading to higher overall construction costs.

• Project Delays or Cancellations: Elevated costs may render some projects financially unfeasible, resulting in delays or cancellations.

• Shift to Alternative Suppliers: Builders might seek domestic or international suppliers outside the U.S., potentially disrupting established supply chains.

Impact on Land Prices

While land prices are influenced by various factors, increased construction costs could dampen demand for new developments, potentially stabilizing or reducing land prices in the short term. However, persistent housing shortages could maintain upward pressure on land values.

Effects on the Construction and Development Industry

The construction industry is likely to face several challenges:

Profit Margin Compression: Firms may experience reduced profit margins due to higher input costs.
Supply Chain Disruptions: Shifting to new suppliers could lead to logistical challenges and delays.
Labor Market Impacts: Increased costs might result in reduced hiring or layoffs within the construction sector.

Most Affected Parts of the Construction Supply Chain

The following segments are expected to be most impacted:

Steel and Aluminum Products: Widely used in construction, these materials will see cost increases due to tariffs.
Lumber: Despite Canada’s robust lumber industry, tariffs on U.S. imports could affect pricing dynamics.
Mechanical Systems: HVAC components and specialized machinery often sourced from the U.S. may become more expensive.

Alternative Trade Agreements and Partners

To mitigate the impact of U.S. tariffs, Canada could strengthen trade relations with other countries:

European Union: The Comprehensive Economic and Trade Agreement (CETA) facilitates trade between Canada and EU nations, offering potential alternative suppliers.
Asia-Pacific Region: Engaging with countries in the Asia-Pacific could provide new sources for construction materials, as evidenced by companies like Teck Resources considering shifts to Asian markets.

Sources of Building Supplies in Vancouver and British Columbia

In British Columbia, building materials are sourced from:

Domestic Production: Local timber and wood products are significant due to the province’s extensive forestry industry.
Imports: Materials such as glass, appliances, and hardware are often imported from the U.S., making them susceptible to tariff-induced price increases.

Offsetting Cost Increases

Potential strategies to counteract rising costs include:

Monetary Policy Adjustments: Lowering interest rates could reduce borrowing costs, partially offsetting increased construction expenses.
Intra-provincial Trade Enhancement: Promoting trade within British Columbia could reduce reliance on imported materials, stabilizing costs.

Elbows up Canadians. We’re in for a rough ride. But our markets are resilient. Our people are educated, hard-working, and diverse. And our nation is unified now more than ever.

Sources

Altus Group. (2025, February 26). Trade tensions: What could tariffs mean for Canada’s construction market? Retrieved from https://www.altusgroup.com/insights/trade-tensions-tariffs-mean-for-canada-construction-market/

Barron’s. (2025, March 3). How Trump’s policies could make the housing market even more unaffordable. Retrieved from https://www.barrons.com/articles/trump-home-housing-prices-real-estate-tariffs-fe89d86d

Canadian Home Builders’ Association. (2025, February 4). 25% tariff hike on Canadian and Mexican goods harms housing affordability. Retrieved from https://www.nahb.org/news-and-economics/press-releases/2025/02/25-percent-tariff-hike-on-canadian-and-mexican-goods-harms-housing-affordability

Chicago Construction News. (2025, February 8). Canadian builders seek alternative suppliers as U.S. tariffs threaten construction costs. Retrieved from https://www.chicagoconstructionnews.com/canadian-builders-seek-alternative-suppliers-as-u-s-tariffs-threaten-construction-costs/

Global News. (2025, February 1). How a trade war and U.S. tariffs could hit Canada’s housing market. Retrieved from https://globalnews.ca/news/10986937/us-canada-tariff-war-housing-impact/

Green Building Canada. (2025, February 11). Impact of proposed US tariffs on Canadian construction. Retrieved from https://greenbuildingcanada.ca/us-tariffs-construction/

National Association of Home Builders. (2025, February 4). 25% tariff hike on Canadian and Mexican goods harms housing affordability. Retrieved from https://www.nahb.org/news-and-economics/press-releases/2025/02/25-percent-tariff-hike-on-canadian-and-mexican-goods-harms-housing-affordability

Reuters. (2025, March 4). Teck CEO says miner could sell to Asia to avoid Trump’s new tariffs. Retrieved from https://www.reuters.com/markets/commodities/teck-ceo-says-miner-could-sell-asia-avoid-trumps-new-tariffs-2025-03-04/

The Wall Street Journal. (2025, February 26). Tariffs fracture aluminum industry: ‘It’s going to cost me a lot of money’.Retrieved from https://www.wsj.com/economy/trade/aluminum-tariffs-higher-industry-costs-76e9ba30

What the RFI? Podcast. (2025, March 4). The impact of tariffs on construction: What architects and contractors need to know. Retrieved from https://whattherfi.com/blog/the-impact-of-tariffs-on-construction-what-architects-and-contractors-need-to-know