U.S. tariff threat creating ‘uncertainty, concern’ for London home builders

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Potential tariffs by the United States on Canadian products could slow the pace of new home construction in London in 2025, with local industry watchers expressing concern over increases in the cost of materials and build times and an overall drop in demand.  

U.S. President Donald Trump’s threat of blanket 25 per cent tariffs on Canadian goods could become a reality as early as Saturday, with Trump’s press secretary, Karoline Leavitt, telling reporters on Tuesday the Feb. 1 date was “still on the books” for the introduction of the damaging duties against Canada and Mexico.  

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Trump initially promised 25 per cent across-the-board tariffs in response to what he called the failure of both countries to curb the illegal flow of people and drugs across the border.  

The president has since linked the tariff threat to economic and trade concerns with Canada and has said repeatedly Canada should become the 51st state.  

“Our economies and our supply chains between the United States and Canada are so intertwined that is almost a guarantee that, if there are tariffs brought in any way, we’re likely going to see impacts on timelines and impacts on costs,” said Jared Zaifman, head of the London Home Builders’ Association.  

Zaifman said the tariffs and any retaliatory measures implemented by Ottawa, which has floated the idea of imposing matching retaliatory tariffs and cutting off energy exports, could result in higher prices for certain products and increase construction costs at a time when the city is facing a housing affordability crisis.  

Essential products needed in home construction that are commonly brought in from the U.S. include steel, aluminum and other components derived from them, as well as plumbing, heating and bathroom fixtures, among others.  

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“It’s very unfortunate,” he said. “Last year was a tough year. We had a lot of housing starts on the rental side in London but there was a lot of excitement and interest and pent-up demand for new single-family homes, townhomes . . . there was a lot of positive momentum building into this year, and the threat of tariffs has created a lot of uncertainty and concern.”    

So far, Zaifman said the uncertainty hasn’t been enough to stop builders from continuing with existing and new projects, though it has certainly “given them pause.”  

It was an opinion echoed by Mike Wallace, executive director of the London Development Institute, an umbrella group for London developers.  

He said the process of taking a project from the planning stages to construction takes years, which is why he doesn’t anticipate any slowdowns in the planning of new projects this year.  

“We deal with longer timeframes on the development side of the real estate business, so we don’t react as quickly to market conditions because we still need to do all this work prior to construction,” he said.  

But besides the increase in costs of building a home, which would ultimately be passed onto consumers, Wallace said a prolonged trade war could cause a lot of economic pain to the local and Canadian economy, making people rethink their decision to buy a home.  

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A weakening in demand brought about by the decision by the Bank of Canada to raise interest rates led to a drop in the number of housing starts for single-family homes and townhouses in both 2023 and 2024.  

The economic impact of a trade war with the U.S. would be sharper, with Premier Doug Ford saying this month the U.S. tariffs alone could result in about 500,000 job losses in Ontario.  

“Not only are we concerned about what’s happening with the potential trade war on the actual input costs to actually build a home,” Wallace said. “We’re also concerned for our customers and whether any uncertainty in the job market based on trade difficulties between the two countries affects our customers and people who can actually enter the market.”  

As a whole, Zaifman said, the construction industry has been lobbying Ottawa not to include any retaliatory tariffs on construction materials “because of the tremendous negative impact it would have on the housing market.”  

“But the reality is, at the end of the day, people need homes, and we need more homes for people because, right now, we’re severely lacking, and we know we have millions of homes to build across the country in the next little while to even catch up to where we need to be.”    

With Canadian Press files  

jjuha@postmedia.com 

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