Trump’s tariffs spook Ontario’s residential construction sector

Donald trump's tariffs on steel and aluminum have Ontario homebuilders raising concerns. CTV Windsor’s Ricardo Veneza investigates.

You can add the Ontario Home Builders’ Association to the list of industry groups raising the alarm over U.S. President Donald Trump’s planned tariffs on steel and aluminum.

The association issued a news release this week indicating its concern the tariffs would stunt already anemic housing starts while further harming near record-low levels of affordability.

“We’re at a turning point, not only for the Canadian economy, but specifically for the housing sector in Ontario,” said Scott Andison, the CEO of OHBA, in a media release. “The potential impact of an economic slowdown, job loss, and decreased investment in residential real estate, could be a brutal blow to the housing sector and therefore to housing affordability for Ontarians.”

The association lists the key tariff risks as follows:

-Recession risk impacting investment in housing and housing starts

-The risk of increased construction costs due to increased construction material costs impacting affordability

-And the currency risk further exacerbating the above effects

In Windsor, where a recent Canadian Chamber of Commerce report ranked the Rose City third for tariff exposure, homebuilders share those concerns — seeing little, if any, silver lining for the sector.

“When it comes to housing, I don’t foresee any,” said Brent Klundert, who heads the Windsor-Essex Home Builders’ Association. “It’s just another hit on affordability and we’re just — our industry can’t take any more hits on affordability. It’s kind of a big deal.”

Trump’s tariffs on steel and aluminum are set at 25 per cent and are scheduled to take effect as of March 12.

It’s a repeat of the president’s game plan in his first term, when he levied tariffs on steel and aluminum albeit at a lower level on the latter.

Klundert says, this time around, the impact is likely to hit harder.

“Predominantly in 2018, it was mostly lowrise construction throughout Windsor-Essex — not all, but predominantly lowrise — which uses far less steel and aluminum than the highrise stuff,” said Klundert. “So, now that we’re getting more higher density [and] a lot more steel going into these builds there’s a greater effect now than there was in 2018.”

While collection of the new U.S. import taxes has yet to begin, Klundert says the simple threat is already having an impact — injecting uncertainty and hesitancy into the housing market.

He said developers who are able will frontload material purchases to keep projects financially viable, but those who can’t will be faced with a decision to delay or outright cancel projects depending on the length and severity of the tariff turmoil.

“It’s having a major, major effect on things,” said Klundert. “We’re hoping that with all the positive stories that have come out of this area and all of the work that’s coming into the city that will outweigh some of these negative aspects.”

The OHBA plans to appeal to the province as its recourse, urging the government to insulate and aid the residential construction sector from a trade war with the U.S.

In Ottawa’s response, the sector is calling for a carve out.

“While retaliatory tariffs may be needed, I’d like to see construction materials, particularly those vital to the residential construction industry, excluded,” continued Andison in his media statement. “We don’t want to make a bad situation worse.”

Housing starts nationally were up just 2 per cent in 2024 from 2023 according to the Canada Mortgage and Housing Corporation (CMHC), but in Ontario total starts have fallen 16 per cent over the same period.

“We’re in a market that hasn’t really picked up,” said Klundert. “We’ve been having affordability issues where we haven’t had a major uptick in a few years.”

The problem for those planning projects years down the road?

There’s no end in sight to the political uncertainty.

“It’s a major concern to know that these political risks can really have adverse effects on our industry here is very concerning,” said Klundert.