As the province attempts to streamline construction, the dual challenges of potential American tariffs and a faltering trade relationship threaten to exacerbate construction costs, stifle investment, and crumble the very foundation of Ontario's housing aspirations.
The Promise of Building Faster Meets Economic Reality
The provincial government’s recent legislation promises to “streamline approvals and cut red tape for developers,” acknowledging that “it takes too long and it costs too much to build infrastructure and homes in Ontario” . This push for speed is critically needed. However, the government has notably become non-committal on its flagship goal of building 1.5 million homes in a decade, with housing starts in 2024 falling significantly short of targets and reaching their lowest levels since 2009 in the first quarter of 2025 . This retreat hints at the powerful headwinds already battering the housing sector.
The Tariff Threat: Pulling the Rug Out from Builders
The most immediate external threat comes from the Trump administration’s tariff policies. The Ontario Home Builders’ Association (OHBA) has expressed extreme concern, warning that 25% tariffs on non-energy imports “will almost certainly result in severe repercussions for Ontario’s housing sector” . The ripple effects are multifold:
Soaring Construction Costs: Builders face a drastic increase in expenses. Canadian suppliers struggling to replace U.S. customers, combined with counter-tariffs on key imports and a potential depreciation of the Canadian dollar, are a recipe for inflated material costs . A specific 50% tariff on copper, a metal essential for electrical wiring and plumbing, could alone increase the cost of a new housing unit by $15,000 to $25,000 .
Crippling Uncertainty and Frozen Investment: The mere threat of tariffs has created an environment where investors are “extremely cautious before starting any new projects” . This uncertainty “clogging the market’s arteries,” keeps potential buyers and developers on the sidelines, fearing that a trade war-induced recession could jeopardize jobs and make large financial commitments untenable .
A Perfect Storm for a Deepening Crisis
The convergence of these factors creates a perfect storm. The Canada Mortgage and Housing Corporation (CMHC) predicts Canadian home prices will fall around 2% in 2025 due to trade tensions, with the most significant drops expected in Ontario . This cooling isn't a sign of improving affordability but a symptom of an economy under pressure.
The Royal Bank of Canada notes the market is already “cracking,” with the sharpest pullback in buyers occurring in Southern Ontario . As housing starts decline and projects are converted to rentals or halted entirely, the progress on increasing supply is eroded . The very goals of the "Fighting Delays, Building Faster Act"—to accelerate construction and increase housing supply—are directly undermined by the economic fallout from a trade war.
The Path Forward: Resilience in the Face of External Pressure
For Ontario, the path forward requires more than just domestic regulatory reform. Navigating this crisis demands a resilient strategy that acknowledges these new external pressures. Builders and buyers alike are forced into a precarious waiting game, with the hope that trade tensions will ease and a gradual recovery can begin by 2026 .
Ultimately, the situation presents a stark lesson: even the most well-intentioned provincial housing policy is vulnerable to international economic forces. The success of Ontario’s housing dreams now depends not only on building faster but on successfully navigating a hostile trade environment that threatens to make building itself economically unviable. Without a resolution, the province's housing crisis may not just persist it could significantly deepen.
