One month into 2025, and the year is already shaping up to be one of the most interesting in memory. Of course, the story capturing everyone’s attention has been the proposed U.S. tariffs on Canadian imports. Understandably, this has sparked a great deal of discussion, concern, and speculation—especially in real estate, where economic shifts can have ripple effects on consumer confidence, construction costs, and market stability.

But before we rush to conclusions, I would suggest taking a more measured approach. The good news is that the U.S. has extended the pause on these tariffs for another 30 days, giving policymakers, economists, and industry leaders more time to assess the situation and consider next steps. While it’s important to stay informed and be prepared, it’s equally important not to let fear drive decision-making before we see concrete outcomes.

What Are the Proposed Tariffs?

At this stage, the proposed tariffs would primarily target key Canadian exports, including raw materials like lumber and steel—both of which are critical to the construction industry. If implemented, these tariffs could drive up costs for builders and developers in both Canada and the U.S., potentially impacting the pricing of new homes, condos, and renovations.

There is also a broader concern about the potential for economic uncertainty. Tariffs can lead to inflationary pressure, shifts in cross-border investment patterns, and currency fluctuation. For homeowners, investors, and prospective buyers, this could mean everything from higher renovation costs to shifts in mortgage rates as financial institutions react to economic trends.

Real Estate Implications

The reality is that it’s simply too early to gauge the long-term effects of these proposed tariffs. That said, here are some reasonable considerations:

1. Short-Term Pricing Trends –While construction costs could rise if tariffs take effect, it remains unclear how much would be absorbed by developers versus passed onto buyers. In the resale market, we are monitoring whether buyers adjust their expectations based on perceived future costs, as well as whether sellers alter listing prices to reflect evolving market conditions. For now, pricing in the Toronto market remains stable.
2. Buyer and Seller Sentiment – Confidence is key. So far, demand remains stable, with TRREB projecting an increase in sales volume to 76,000 transactions for the coming year. That said, we are monitoring how prolonged uncertainty might influence decision-making for those entering the market.
3. Policy Shifts and Adjustments – Political and economic pressures at home and abroad could lead to revisions or exemptions in tariff policies. Many industries, including U.S. construction, have a vested interest in seeing a more nuanced approach.
4. Interest Rate Trajectory – Beyond the recent Bank of Canada rate cut, future adjustments could further influence market activity. Borrowing costs, inflation trends, and global economic conditions all play a role in shaping real estate opportunities.

Tariffs Are Just One Piece of the Puzzle 

It’s important to remember that markets don’t operate in a vacuum. While any one factor can seem like a game-changer, real estate is influenced by a range of inputs—interest rates, employment levels, consumer confidence, supply and demand, and global economic conditions. 

As an example, on January 29th, the Bank of Canada announced a 25 basis-point interest rate cut. Lower borrowing costs typically encourage homebuyers to enter the market, counteracting some of the uncertainty brought by tariff discussions. While tariffs, if implemented, could impact construction costs and consumer confidence, there are other forces shaping the real estate landscape.

A Time for Patience and Strategic Thinking

The most important takeaway? It’s early. While this is undoubtedly a topic worth following, it’s not one that should dictate immediate, rash decisions.

Over the coming weeks, we’ll get a clearer sense of how negotiations unfold, how markets react, and whether the U.S. will ultimately follow through on its tariff rhetoric. Historically, proposed trade measures often undergo modifications before full implementation, and industries affected by such policies—including real estate—have ways of adapting.

For buyers and sellers in the Toronto market, this means keeping an eye on developments without overreacting. If you’re in the market for a new home, considering an investment, or planning a renovation, now is the time to plan thoughtfully rather than make decisions based on speculation.

At Harvey Kalles Real Estate, we’re always monitoring economic trends and policy shifts to provide our clients with the best possible guidance. While we don’t have a crystal ball, we do have decades of experience navigating market fluctuations.

For now, stay informed, and most importantly—stay patient. The situation is evolving, and we’ll continue to provide insights as things unfold. If you have questions about how this might impact your real estate plans, don’t hesitate to reach out.