As of March 4, 2025, the United States, under President Donald Trump, has imposed significant tariffs on Canadian and Mexican goods. These include a 25% tariff on all imports from Canada and Mexico, along with a 10% tariff on Canadian energy exports. In response, Canada has imposed its own 25% tariff on $30 billion worth of U.S. goods, with the potential to expand to $155 billion if tensions escalate.

While these tariffs are primarily directed at trade between the two nations, their impact will be felt by Canadian consumers, businesses, and the real estate market—especially in the Okanagan. Let’s break down how these changes could affect you, your home, and the broader market.

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Which Materials Are Most Affected?

Although the tariffs apply to a wide range of industries, one of the biggest concerns for homeowners, buyers, and builders in the Okanagan is their effect on construction materials. The U.S. tariffs target key resources that, while domestically produced in Canada, are still tied to international pricing and supply chains:

• Steel: 25% tariff
• Aluminum: 25% tariff
• Softwood Lumber: An additional 25% tariff on top of the existing 14.5% duty, bringing the total to nearly 40%

Since Canada exports a significant portion of its steel, aluminum, and lumber to the U.S., reduced demand from American buyers could lead to lower domestic production. In turn, this could drive up prices in Canada, affecting everything from home construction to renovations.

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Why Will Prices Rise in Canada?

Even though these materials are produced domestically, Canadian builders could still see price increases due to several factors:

1. Reduced U.S. Demand Lowers Domestic Supply
   • A large portion of Canadian steel, aluminum, and lumber is exported to the U.S. If American buyers purchase less due to tariffs, Canadian producers may cut back on production.
   • Lower production can lead to supply shortages in Canada, pushing prices up for domestic buyers, including Canadian builders.
2. Price Volatility and Market Uncertainty
   • Even if materials stay within Canada, global pricing affects local costs. If producers lose U.S. buyers, they may increase domestic prices to offset revenue losses.
   • Market speculation and uncertainty often drive up prices as suppliers hedge against potential financial risks.
3. Increased Domestic Competition for Materials
   • If exports to the U.S. slow down, Canadian builders and manufacturers will have to compete more for available materials.
   • More competition for a limited supply usually results in price increases.
4. Potential Retaliatory Measures or Supply Chain Disruptions
   • The trade dispute may lead to broader economic shifts, including supply chain disruptions, higher transportation costs, or retaliatory tariffs on other goods that indirectly affect material pricing.

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Immediate Impact

While it’s still early, the effects of these tariffs could ripple across the local housing market in several ways:

• ‍Higher Costs for New Homes: Builders who rely on Canadian steel, aluminum, and lumber will face increased costs, which are likely to be passed on to buyers. As a result, new homes in Kelowna, West Kelowna, Peachland, and surrounding areas could see price increases.‍
• Increased Renovation Expenses: If you’re planning a renovation, securing contractor quotes sooner rather than later may be wise. The cost of materials could rise significantly, particularly for projects that require large amounts of wood, steel, or aluminum.‍
• Construction Delays: With supply chain disruptions and cost fluctuations, builders and contractors may face delays in sourcing materials, which could slow down construction timelines for both new builds and renovations.‍
• More Demand for Existing Homes: As new home prices rise, buyers may shift their focus to resale properties. This could lead to increased demand for existing homes, pushing their prices higher as well.

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How This Affects You

If You’re Buying a Home…

• Expect Higher Prices: New construction will likely be more expensive.
• Consider Resale Homes: Existing properties might offer better value in the short term.
• Secure Financing Early: A strong mortgage pre-approval will help you act quickly in a shifting market.
• Be Strategic: If you find the right home, be ready to move, but don’t rush into a decision.

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If You’re Selling a Home…

• Highlight Recent Upgrades: Homes with renovations completed before cost increases will stand out.
• Price It Competitively: Work with your real estate agent to set the best price for the market.
• Be Open to Negotiation: With economic uncertainty, flexibility can help close the deal.

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If You’re Planning a Renovation…

• Get Quotes Early: Contractors may soon adjust prices due to higher material costs.
• Consider Alternative Materials: Some options may be more cost-effective.
• Plan for Delays: Supply chain issues could extend project timelines.

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Expert Guidance

The Okanagan real estate market is always evolving, and these tariffs add another layer of complexity. At Coldwell Banker Horizon Realty, we’re committed to helping you navigate these changes with expert advice and personalized solutions. Our mission is simple: Help People! If you have questions about how these tariffs may affect your buying, selling, or renovation plans, reach out to us for a no-pressure consultation. We’re here to listen, guide, and help you make the best decisions for your future.

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Sources:

• Senate Finance Committee
• White House
• U.S. Customs and Border Protection