How Tariffs Are Fueling the Housing Crisis in the Greater Toronto Area

The housing crisis in Toronto in 2025 has been driven by a combination of soaring demand, limited supply, and rising construction costs. One major contributor to this crisis is tariffs. These taxes on imported goods like lumber and steel have added significant cost pressures on builders, slowed down construction, and ultimately raised home prices. In this post, we explore how tariffs are impacting homeowners, buyers, and the entire housing ecosystem in the Greater Toronto Area (GTA).

Toronto’s Housing Supply Meets Global Trade Tensions

With the GTA's population continuing to grow and years of under-building, there’s a pressing need for new housing. Yet, builders are facing skyrocketing material costs, many of which are affected by international trade policies. Tariffs between Canada and the U.S. on key construction materials have increased expenses and created delays, further choking housing supply.

Lumber and Steel: Core Materials, Higher Costs

Lumber Tariffs

The softwood lumber dispute between Canada and the U.S. has led to fluctuating tariffs, sometimes over 20%. While Canada produces a lot of its own lumber, prices are influenced by North American markets. During the pandemic, lumber costs tripled at one point. Tariffs didn’t cause the surge but certainly worsened it, adding thousands to the cost of each new home.

Steel and Aluminum Tariffs

The U.S. imposed a 25% tariff on Canadian steel and 10% on aluminum. Canada responded in kind. These materials are essential for both low-rise and high-rise construction in Toronto. As a result, builders are facing higher costs on everything from structural beams to HVAC systems.

Tariffs Create Delays and Uncertainty

Builders rely on predictable material costs and supply chains. When tariffs disrupt these, delays happen. For example, Canadian builders may avoid U.S. suppliers and face shortages until new relationships are built. Certain appliances and fixtures may also get stuck at the border or become significantly more expensive, pausing projects or requiring substitutions.

Housing Starts Are Slowing

With all these cost pressures, housing starts in Ontario dropped by 16% in 2024. Many builders in the GTA have paused or cancelled projects. Tariffs are now another reason to hesitate. At the same time, government policies are trying to increase housing supply, creating conflicting pressures.

Homebuyers Feel the Impact

Higher construction costs trickle down. Whether you’re buying a new build or a resale home, you’ll feel the pinch. Renovation costs have also surged as materials like drywall and wood framing rise in price. Even if you're not planning to buy right now, the overall lack of supply driven by high building costs keeps home prices elevated.

Policy Conflicts and Possible Relief

Ontario and federal officials have criticized U.S. tariffs, calling them unjustified and harmful to housing affordability. There have even been discussions around offering financial relief to builders. Long-term, trade negotiations could reduce or eliminate tariffs, but progress is slow.

Tips for Homeowners and Buyers

Plan Renovations Early: Lock in prices before new tariffs kick in.
Consider Resale or Move-In Ready Homes: New builds may be delayed.
Stay Updated: Trade policy can shift quickly. Monitor announcements.
Highlight Cost-Saving Features: Sellers can appeal to cost-conscious buyers.
Think Long-Term: Toronto’s housing market is resilient. Plan accordingly.

Final Thoughts

Tariffs aren’t the sole cause of Toronto’s housing crisis, but they’re adding serious pressure. With already high interest rates and low supply, the added construction costs are pushing home prices further out of reach for many. As policymakers look to stimulate building and make housing more affordable, resolving trade tensions could be a key step toward that goal.

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How Tariffs Are Fueling the Housing Crisis in the Greater Toronto Area