The temporary relief is over—US President Donald Trump has reaffirmed imposing tariffs on Canadian imports on March 4th, adding another layer of economic uncertainty. The delay has expired, and Canada now faces a fresh wave of trade tensions that could have long-term consequences for mortgage rates, home affordability, and economic stability.

While many expected these tariffs to be used as a negotiation tactic, the reality is sinking in: Canada’s housing market and financial sector must prepare for a new era of trade volatility. The impact will be felt across manufacturing-heavy regions like Ontario, Quebec, and Atlantic Canada, while energy-rich provinces may be spared the worst. Here’s what Canadian homebuyers and homeowners need to know as tariffs take effect.

Trade Uncertainty Will Continue to Disrupt the Housing Market

The biggest casualty of Trump’s trade policies is predictability. According to financial experts, the ongoing uncertainty surrounding tariffs is already affecting business investment, employment, and consumer confidence, key housing market drivers.

Housing demand may slow in trade-reliant provinces, particularly Ontario and Quebec. Canadian real estate investors should prepare for increased market volatility, especially in manufacturing hubs. Home and mortgage affordability could be squeezed if inflation rises due to higher import costs. The 2026 USMCA renegotiation will be the next major flashpoint for Canadian trade policy, meaning homeowners should expect volatility to persist beyond this year.

How Will the Bank of Canada Respond to Tariffs? 

The Bank of Canada (BoC) has aggressively cut rates to support the slowing Canadian economy. However, as US tariffs increase costs for Canadian businesses, the central bank will likely continue lowering its policy interest rate to cushion the economic blow.

Lower mortgage rates are expected, which is excellent news for borrowers seeking variable (VRM) and adjustable (ARM) mortgages. Initially, fixed mortgage rates may decline alongside bond yields, but mortgage lenders’ risk premiums could limit how quickly lenders adjust rates. Housing markets in export-reliant provinces could soften as job security concerns lead to slower home sales.

However, the BoC has a potential risk that they must balance. If US tariffs cause inflation to spike, the BoC may have to pause or reverse its rate-cutting cycle, complicating the outlook for mortgage rates and the housing market.

Retaliatory Tariffs Could Drive Inflation & Mortgage Affordability Concerns 

If Canada retaliates with tariffs on US imports, everyday costs—including food, gas, and construction materials—will rise.

According to industry estimates, gas prices could jump 10% in Ontario and Quebec, where dependence on US energy is highest. Imported food prices will climb, with key grocery items like fresh fruits and vegetables increasing immediately. Home renovation and construction costs will surge as tariffs impact imported materials like lumber and steel.

While lower mortgage interest rates could make mortgages more affordable, the rising cost of living could erase these savings for many Canadians.

Which Provinces Will Feel the Biggest Housing Market Impact? 

Not all provinces will be equally affected by tariffs. Ontario, Quebec, and Atlantic Canada expect economic uncertainty to slow job and economic growth, impacting housing demand. Alberta and Saskatchewan’s energy exports face a 10% tariff, but demand remains strong, keeping the housing market more stable. British Columbia and Nova Scotia’s diversified economies may weather the uncertainty better than manufacturing-heavy regions.

Meanwhile, new vehicle prices are expected to rise by $8,000 to $10,000 if auto tariffs take effect—another factor that could impact consumer confidence.

Government Policy & Support for Homeowners 

Federal and provincial governments are weighing financial relief programs to offset economic risks. Expect targeted support for impacted homeowners and businesses. Mortgage affordability incentives could be adjusted, particularly for first-time buyers. While government intervention may help, homeowners should proactively protect their mortgage and housing costs. On a positive note, long-term trade diversification efforts will reduce dependence on the US, potentially stabilizing the economy.

How to Adapt Your Mortgage Strategy Amid Trade Uncertainty 

Navigating the housing market amid trade uncertainty requires proactive mortgage planning. With Trump’s tariffs coming into effect and rising economic volatility, Canadian homebuyers and homeowners must consider key financial strategies to protect their investments and minimize risks.

One of the most critical steps is to monitor interest rate trends and mortgage rate forecasts. The Bank of Canada has been cutting the policy rate to counteract economic headwinds. Still, if import costs lead to high inflation due to trade-related disruptions, the central bank may be forced to slow or reverse its rate cuts. For homeowners, this means keeping a close watch on mortgage rate movements and preparing for potential shifts. 

Variable mortgage rates may not go down in a straight line, so for those risk-averse borrowers, taking on a higher fixed-rate mortgage now could curtail some of your anxiety and keep your budget predictable over the mortgage term. Variable-rate mortgages (VRM) often provide short-term savings. Still, borrowers must remain cautious about inflationary risks, especially those with adjustable-rate mortgages (ARM), which see mortgage payments fluctuate based on your lender’s prime rate changes.

Another important consideration is how trade policies impact regional economies. Homebuyers should assess the economic stability of the provinces or cities they are considering. Regions heavily dependent on US trade, such as Ontario and Quebec, may experience a slower appreciation of average home prices if manufacturing and export industries take a hit. In contrast, provinces with strong energy sectors, such as Alberta and Saskatchewan, may remain more insulated from the effects of Trump’s tariffs. Understanding local economic conditions can help buyers decide where to purchase a home and anticipate potential long-term value fluctuations.

For homeowners planning renovations, locking in renovation costs earlier is essential. Due to increased tariffs and supply chain disruptions, imported materials, including lumber, steel, and home appliances, will likely become more expensive. Contractors may also raise prices to account for higher costs, making it more expensive to complete home improvement projects. By securing fixed-price contracts with builders or purchasing materials in advance, homeowners can mitigate the financial impact of rising costs.

Finally, leveraging government support programs can provide relief if trade disruptions lead to economic downturns or job losses. Provincial and federal governments may introduce stimulus measures, such as mortgage assistance programs, housing affordability initiatives, or temporary financial relief for affected industries. Staying informed about available support options can help homeowners navigate financial challenges and reduce the burden of unexpected expenses.

By keeping abreast of mortgage rate trends, considering regional economic factors, securing renovation costs early, and utilizing government relief programs when necessary, Canadian homebuyers and homeowners can adapt their mortgage strategies to remain financially stable in uncertain times.

Preparing for an Uncertain Housing Market

The return of Trump’s tariffs means long-term economic uncertainty for Canada, particularly for homebuyers and homeowners navigating the mortgage market. With the Bank of Canada expected to continue cutting rates, there will be opportunities for mortgage savings—but rising inflation and cost-of-living increases could offset those benefits. To navigate this period, stay informed, plan your mortgage strategy carefully, and consult a mortgage broker to explore the best financing options for your needs and financial circumstances.

Connect with a nesto mortgage expert today for personalized advice and mortgage strategy amid ongoing economic uncertainty.

---

Why Choose nesto

At nesto, our commission-free mortgage experts, certified in multiple provinces, provide exceptional advice and service that exceeds industry standards. Our mortgage experts are non-commissioned salaried employees who provide impartial guidance on mortgage options tailored to your needs and are evaluated based on client satisfaction and advice quality. nesto aims to transform the mortgage industry by providing honest advice and competitive rates using a 100% fully digital, transparent, seamless process.

nesto is on a mission to offer a positive, empowering and transparent property financing experience – simplified from start to finish.

Contact our licensed and knowledgeable mortgage experts to find your best mortgage rate in Canada.

---