Here we are again, on the precipice of PENDING tariffs (albeit a little bit of reprieve for ~30 years - minus the tariffs on steel & aluminium announced on Monday)...
So as we slowly unravel the mind of the new U.S. president, to get to the heart of the issue, we really have to wonder -- how do these tariffs impact Canada, but more specifically, Alberta, Calgary and the Calgary housing market!
A few things are for sure - a lot of uncertainty on the horizon, without any REAL implications, as of yet.
What we can focus on is what we DO know, and based on simple economics, here are things we know that the TARIFFS CAN IMPACT:
1. DECLINING INTEREST RATES: we've already seen 5 cuts since last year and we are facing an enormous wall of mortgage renewals (60%) by the end of 2026. We know that tariffs would significantly handicap Canada's economy, and to fight increasing inflation due to price increases as a result of tariffs, the BoC may have to cut rates further to keep our economy from falling through the bottom. BMO has forecasted a policy rate of 1.50% by the end of 2025, if U.S. imposes the tariffs. Whether or not that will happen is to be seen, but the takeaway here is that the BoC will have to cut rates to combat a declining economy if that happens.
2. CONSUMERS DELAY PURCHASES: In the same vein as increasing costs, the result are that consumers will begin to delay big purchases such as vehicles and properties, causing some softening in demand. However, those who have to buy a home, still have to buy a home and will still, buy a home.
3. PRICE OF NEW BUILDS TO INCREASE: With tariffs on home building supplies and raw materials, we would likely see a material increase in the cost of new homes, to the tune of 10-15%, or more. It's unlikely that builders would just eat that cost, but rather that will be passed down to the end buyer. The trickle down impact COULD BE that buyers migrate towards the resale market (leading to further demand in an already constricted supply landscape), and maybe lead to resale home values increase.
4. COST OF RENOVATIONS TO INCREASE: Similar to costs going up on new builds, the cost of renovations will also likely see a dramatic increase (recall the lumber shortage impact of 2021).
5. UNEMPLOYMENT TO INCREASE IN OTHER PROVINCES: Extrapolating the impact of tariffs - it would appear that tariffs will impact industries that are largely manufacturing / aerospace / lumber based. This truly impacts the likes of Ontario, BC, Quebec, and a lesser extent, Alberta. Sure we may see the 10% tariff on energy exports, but that is not close to the 25% on other goods produced by other provinces.
6. INCREASED INTER-PROVINCIAL MIGRATION TO ALBERTA: That said, should we see those heavily-populated and higher-cost-of-living provinces' economies decline, we very well could be on the receiving end of ADDITIONAL interprovincial migrants looking for good paying jobs in a lower cost of living province. Also, consider those who have already moved here from those provinces, the small foothold of those who are here will likely attract relatives, friends, family to also make the move, easier. CREB forecasts Calgary's population growth to be 3.1% in 2025.