Key Takeaways
- If Trump imposes tariffs on Canadian imports, home construction costs could skyrocket, making homeownership even more unattainable for millions of Americans.
- Higher material and energy costs could cripple the commercial real estate sector, stalling infrastructure projects and forcing developers to cancel or delay major builds.
- Canadian investors, a major force in U.S. housing and commercial markets, could withdraw capital, creating funding shortages and driving up borrowing costs.
A Political Time Bomb for Real Estate Investors
The real estate market in the United States is walking a tightrope.
President Donald Trump has declared economic war on Canada—and real estate investors, homebuilders, and construction companies should be terrified.
On March 7, 2025, Trump lashed out at what he called “tremendously high Canadian tariffs on dairy and lumber” and vowed that Canada would be met with the same punishment unless they backed down.
His words sent shockwaves across industries that rely on Canadian imports. And no sector will be hit harder than real estate.
If Trump follows through, the entire foundation of U.S. real estate investing could be shaken overnight.
Construction, infrastructure, energy, HVAC, and even financing would be affected. It’s time to look at what happens when the biggest real estate supplier in the U.S. gets cut off.
The U.S. Real Estate Market’s Dirty Little Secret: Canada Runs the Show?
Most Americans don’t realize just how much of the real estate market’s lifeblood flows from Canada.
The United States depends on its northern neighbor for nearly everything used to build, maintain, and power its homes and buildings.
Let’s break it down.
Lumber and Wood Products: The First Domino to Fall
- Softwood Lumber: Canada supplies a staggering 70% of the U.S.’s softwood lumber needs. It’s the backbone of homebuilding and renovations. Tariffs would send prices through the roof.
- Plywood and Engineered Wood: Critical for roofing, flooring, and structural stability, Canadian plywood is essential for both residential and commercial developments.
- Timber and Prefabricated Wood Products: Canada exports modular homes, prefabricated buildings, and log home materials to the U.S., fueling the affordable housing sector.
If Trump slaps tariffs on these imports, the cost of building a home could skyrocket overnight. And the housing shortage? It just got worse.
Construction Materials: The Concrete Crisis
The real estate industry isn’t just wood and nails—it needs concrete, steel, and metal, and Canada is a major supplier in all these areas.
- Concrete and Cement: The U.S. imports millions of tons of cement and aggregates from Canada. These materials are the foundation (literally) of housing and infrastructure projects.
- Steel and Metal Products: The U.S. construction industry is deeply reliant on Canadian steel and aluminum, which are used in everything from skyscrapers to bridges.
Imagine the price of steel-framed buildings, bridges, and roads doubling overnight. That’s what Trump’s tariffs could do.
Energy and Utilities: The Cost to Keep the Lights On
You might not think of oil, gas, and electricity as part of the real estate sector, but without them, real estate grinds to a halt.
- Electricity: The Northeast and Midwest import large amounts of hydroelectric power from Canada. Tariffs on Canadian energy could send utility bills soaring.
- Oil and Gas: Canada is the largest foreign supplier of crude oil and natural gas to the U.S.. These fuels heat homes, power businesses, and drive transportation. A tariff would send energy costs through the roof, affecting home affordability and rental markets.
HVAC and Plumbing Supplies: The Hidden Costs of Comfort
- Copper Pipes and Fixtures: Canadian copper is widely used in plumbing and electrical systems throughout the U.S.
- HVAC Equipment: Canada is a major supplier of heating and cooling systems, essential for both residential and commercial buildings.
If Canada gets slapped with tariffs, the cost of keeping homes warm in winter and cool in summer could spike.
Prefab Homes and Manufactured Housing: The End of Affordable Housing?
Canada exports prefabricated homes and mobile home components to the U.S.—a crucial piece of the affordable housing puzzle.
If these products get more expensive, homeownership becomes even further out of reach for millions of Americans.
Windows, Doors, and Insulation: Say Goodbye to Energy Efficiency
- Glass and Windows: Canada supplies high-performance, energy-efficient windows that help homeowners cut utility costs.
- Insulation Materials: Fiberglass and foam insulation imported from Canada are essential to keeping homes warm in the winter and cool in the summer.
Tariffs would drive up energy costs even further, hurting landlords and homeowners alike.
Real Estate Investment Capital: Canadian Money Runs U.S. Real Estate
The invisible force driving American real estate?
Canadian investors.
Canadian pension funds, real estate firms, and individual investors pour billions into the U.S. housing and commercial real estate market.
If the U.S. declares economic war on Canada, will those investors pull their money out of the U.S.?
What Could Happen If Trump’s Tariffs Go Into Effect?
If President Trump follows through on his threat to impose reciprocal tariffs on Canadian real estate imports, the entire U.S. housing and commercial real estate market could be in for a brutal shock.
From construction slowdowns to skyrocketing home prices, infrastructure setbacks, and an energy crisis, the effects could ripple through every sector tied to real estate.
Here’s a look at what could happen next.
1. Construction Costs Explode
If tariffs hit Canadian lumber, cement, steel, and insulation, construction costs could surge overnight.
- Lumber Prices Go Through the Roof – With 70% of U.S. softwood lumber coming from Canada, new tariffs could make lumber 30-40% more expensive—an immediate blow to homebuilders.
- Cement and Steel Costs Climb – Canada supplies critical cement and structural steel to U.S. infrastructure. Tariffs would mean higher costs for bridges, roads, and new developments.
- Homebuilders Freeze Projects – As material prices skyrocket, builders might slow down or cancel projects, reducing new housing supply at a time when inventory is already critically low.
- A New Housing Crisis? – Less supply and higher costs could worsen the housing shortage, making homeownership even more unattainable for millions of Americans.
2. Home Prices Skyrocket
With fewer homes being built, the basic laws of supply and demand could take hold—pushing home prices to new record highs.
- First-Time Homebuyers Are Squeezed Out – Buyers already struggling with high mortgage rates and inflation could find themselves priced out of the market entirely.
- Investors Face Higher Acquisition Costs – For real estate investors, the cost of purchasing and renovating properties could skyrocket, shrinking margins and increasing rents.
- A Landlord’s Market Emerges – With homeownership slipping further away, demand for rentals could surge, giving landlords more power to raise rents and limit tenant concessions.
- Rural and Suburban Expansion Stalls – Areas with fast-growing housing markets (think Texas, Florida, and Tennessee) could see development slow to a crawl as costs become unmanageable.
3. Infrastructure and Commercial Projects Stall
It’s not just residential real estate that could take a hit—infrastructure and commercial projects also depend heavily on Canadian imports.
- Office Buildings, Warehouses, and Multifamily Developments Cost More to Build – Tariffs on steel, glass, and insulation could push commercial construction costs up by double digits.
- Developers Rethink Large-Scale Projects – Major players may scrap or delay new developments, leading to job losses and economic slowdowns in key markets.
- Public Infrastructure Faces Delays – Bridges, roads, and transit projects require Canadian cement and steel. If costs soar, federal and state governments may struggle to fund crucial projects.
- Job Losses in the Construction Industry – With fewer projects moving forward, construction firms could lay off workers, increasing unemployment in one of America’s largest industries.
4. Higher Energy Costs Worsen Inflation
Most Americans don’t realize just how much U.S. energy comes from Canada—but tariffs on oil, gas, and electricity imports could send energy prices soaring.
- Electricity Prices Surge – The Northeast and Midwest rely heavily on Canadian hydroelectric power. If tariffs drive up energy costs, expect higher electric bills across entire regions.
- Home Heating Becomes More Expensive – Canadian natural gas helps keep millions of U.S. homes warm in the winter. Tariffs could mean heating costs rise sharply, hurting lower-income households the most.
- Commercial Real Estate Feels the Pain – Higher energy costs would eat into the bottom line of commercial landlords and large apartment complexes, forcing them to increase rents or cut services.
- Inflation Spirals Out of Control – With higher building costs, more expensive energy, and increasing rents, inflation in the real estate sector could accelerate, making affordability an even bigger issue.
5. Canadian Investment Pulls Out of U.S. Markets
Canada isn’t just a supplier of real estate materials—it’s also a major investor in U.S. real estate.
If relations between the two countries deteriorate, Canadian capital could exit U.S. markets altogether.
- Pension Funds Pull Back – Canada’s pension funds are among the biggest investors in U.S. commercial real estate—owning office buildings, industrial properties, and apartment complexes.
- Cross-Border REITs Take a Hit – Real estate investment trusts (REITs) that heavily rely on Canadian investment capital could see a wave of divestment, leading to lower share prices.
- Luxury and High-End Real Estate Suffers – Canadian investors own significant amounts of high-end U.S. real estate, particularly in New York, Miami, and Los Angeles. If they start selling off assets, luxury property values could take a hit.
- Commercial Lending Tightens – Canadian banks and investment firms provide billions in financing for U.S. real estate projects. A pullback in lending could make it even harder for developers and investors to secure funding.
A Real Estate Earthquake?
If Trump’s tariffs on Canada move forward, the U.S. real estate market could be facing one of its biggest shakeups in modern history.
- Homebuilders could struggle.
- Homebuyers could be priced out of the market.
- Landlords and real estate investors could see costs skyrocket.
- Infrastructure and commercial development could grind to a halt.
- Energy prices could surge, fueling more inflation.
- Canadian investment could disappear overnight.
This isn’t just a political trade war—it’s an all-out economic battle that could redefine the real estate investing landscape for years to come.
Will Trump pull the trigger?
Assessment: A Potential Crisis in the Making
If Trump imposes these tariffs, expect a real estate recession fueled by skyrocketing costs and supply chain disruptions.
- Homebuyers will suffer.
- Investors will struggle.
- Construction companies will be forced to raise prices or shut down projects.
The U.S. real estate market is playing a dangerous game, and if the tariffs go into effect, this could be one of the biggest economic disasters in modern history.
Stay tuned.
The next move belongs to Trump.
