In British Columbia, we concluded October with one of the most peculiar provincial elections in recent history, only to immediately shift our focus across the border to an even more bizarre event.
Here in the realm of socialized healthcare and progressive eateries, the rhetoric of United States President-elect Donald Trump can often appear like nationalist propaganda, a poorly scripted comedy, or simply wild boasting. Regardless of personal feelings towards him, Trump is set to become the 47th president of the U.S.
Impacts of Blanket Tariffs & a Challenging Housing Market
Since the U.S. election, the national media has been filled with Trump’s threats of imposing a 25% tariff on all goods from Canada and Mexico. This poses immediate challenges for B.C.’s forestry products, Ontario-made cars, and key commodities like aluminum and dairy. Additionally, with talks of renegotiating NAFTA/CUSMA on the horizon, these products are in for a rough road ahead.
On the housing front, we’re experiencing similar supply shortages, rising home prices, and difficult market conditions as many parts of the U.S. At the same time, strict housing policies and economic uncertainty have slowed down new construction in both regions, exacerbating market conditions.
Canadian Challenges: Existing Issues Without Tariff Threats
There are noticeable differences in our national per capita GDP and household incomes compared to the U.S. Canada has fallen behind significantly in both areas over the past decade.
Not only are we producing less per person, but our average incomes are also lower than those in the U.S. For instance, in the pricey housing market of San Francisco, the median salary is $104,400 USD—considerably higher than the averages in Vancouver and Toronto.
These factors make life particularly challenging in Canada’s major metropolitan areas as residents struggle with high living costs and expensive housing.
In summary, our domestic housing situation is already complex, even without the threat of Trump’s tariffs. Alberta has been vocal in opposing federal energy restrictions that contradict the “open for business” energy agenda pushed by Trump. Following Prime Minister Trudeau’s meeting with Trump in late November, the Canadian government is working to strengthen border security while opposition to the Liberals grows across the country.
Expected Impact on Our GDP
With Canada already navigating economic challenges, the uncertain recovery in 2025 faces further obstacles due to Trump’s trade strategies. As negotiations on NAFTA/CUSMA commence, the U.S.’s intimidating tactics and demands for Canada and Mexico to take subservient roles in the agreement are likely to impact our national GDP.
Amid this uncertainty, our dollar is weakening against the U.S. currency, and the Bank of Canada is implementing rate cuts to stimulate economic growth.
Effects of Trade War on Housing Market and Construction
The looming trade war and potential tariffs under Trump’s leadership will raise the costs of building supplies and imports. As Canada’s largest trading partner, the U.S., engaging in a trade war would be detrimental to both economies. Extended reciprocal tariffs could escalate prices on both sides of the border, impacting homebuilder profitability and potentially stalling new construction.
Ideally, Canada can navigate past Trump’s threats through negotiation. NAFTA was designed to benefit all participating countries mutually, but Trump’s perspective portrays Mexico and Canada as unfairly benefiting at the U.S.’s expense.
This presents a challenging situation for federal negotiators, balancing statistical data with political rhetoric. Hopefully, diplomacy and patience can lead to a resolution to preserve the successful NAFTA partnership.
Please note that BCREA refrains from responding to comments on its online articles.
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