“Stupid is as stupid does.” The quote by Tom Hanks in the Forrest Gump movie springs to mind when I hear U.S. President Donald Trump talk about imposing tariffs on Canada and others.
If you listen to him speak, tariffs are the be-all and end-all for everything that ails America. Just not true.
It is utterly ridiculous for the president and his band of White House sycophants to impose any tariffs on Canada. It makes no sense and will only hurt the residential construction industry on both sides of the border, as the National Association of Home Builders recently pointed out.
We were spared from a blanket 10-per-cent reciprocal tariff on most imports going into the U.S., but levies on steel, aluminum, and the auto industry remain in place. Our leaders have responded with a 25-per-cent levy on all vehicles coming into Canada that are not CUSMA compliant. Separately, $60 billion in retaliatory measures that we imposed earlier on the U.S. remain in place.
Stay tuned, though. The story is not over. We are not out of the woods. In announcing his plan, Trump kept bashing Canada and pushing the narrative that we are taking advantage of the U.S.
Builders Need Certainty
This tariff tit-for-tat couldn’t have come at a worse time. Before shovels go in the ground, developers and builders must have certainty that they can sell the homes. With the on-again, off-again threat of levies, the ground keeps shifting. The wild stock market swings are evidence of that.
A prolonged tariff war will significantly affect the residential construction industry. Builders are already having a tough time building homes that people can afford. Many are leaving our cities in search of accommodation elsewhere. Uncertainty over tariffs will only make matters worse.
Over the years, the residential construction industry has taken its fair share of licks. High interest rates, inflation, and escalating supply chain and construction costs have all added to the cost of a new home. Productivity has been crushed through an inefficient regulatory and approvals system which is blamed on the industry. Exorbitant taxes, fees and levies, meanwhile, have added to the price tag. Starts are down, sales have fallen off a cliff, and developers are wary of starting new projects.
Throw into the mix the chaos over tariffs and the situation becomes more untenable. Investors, developers and builders will have yet another reason to pull on the reins.
The supply chains of Canada and the U.S. are so very interconnected. Separating them would be like trying to unscramble an omelette. Tariffs make the situation all the more confusing.
Home Prices Would Rise
We export a large amount of steel and aluminum to the U.S. and import plywood, glass, metal fittings, light fixtures, ceramics, electrical parts, plumbing and mechanical components.
The U.S. National Association of Home Builders notes that Canada accounts for 85 per cent of all U.S. softwood lumber imports. Tariffs would raise the price of an average home by $9,200.
Tariffs have been tried in the past. They were introduced in the 1930s and sparked a devastating trade war between the U.S. and other countries. Trump imposed tariffs in 2018 on steel and aluminum from Canada, but we responded with countermeasures against $16.6 billion of steel, aluminum and other products from the U.S. and in 2019 they were dropped.
The lesson should have been learned then.
Tariffs Are Not the Answer
We are at a critical time. Housing affordability is already a serious challenge for consumers on both sides of the border. Instead of tariffs, Canada and the U.S. should be working together to build a more reliable and secure supply chain and lower the cost of building homes.
Tariffs are a mistake. They will make building homes more expensive.
The entire tariff strategy lies in the mind of a U.S. president who is notoriously impulsive and unpredictable, not to mention uninformed.
For example, his 10-per-cent tariffs include the Heard and McDonald Islands off the coast of Antarctica. The islands are uninhabited by human beings. Only penguins, birds and seals live there.
Good luck collecting those levies.
Sadly, though, it shows how badly this matter has been bungled by Trump and the U.S. administration. It is time that he dropped the whole tariff issue. There is no winner in a trade war.