The Trade War Is Back

🏗️ Construction Costs Could Climb

Source: RENX

The 411: Canada’s trade fight with the U.S. is heating up again, creating another headache for commercial real estate as developers face higher construction costs and even more uncertainty.

• Canada pulled out of U.S. trade talks on Aug. 21, bringing tariff uncertainty back into focus.

• Roughly 9% of Canadian employment is tied to industries dependent on U.S. demand, according to Statistics Canada.

• Ontario and other parts of Central Canada could feel the biggest impact because of their exposure to auto, steel, aluminum, copper and manufacturing.

• Tariffs on construction inputs like steel, aluminum and lumber could push development costs higher.

• Higher costs could make already difficult projects even harder to finance and build.

• Industrial real estate faces the most direct risk as tariffs hit manufacturers and warehouses, although Colliers says fundamentals remain relatively strong.

Why This Matters: Real estate can handle bad news better than uncertainty. Developers are making decisions today on projects that take years to finance, approve and build, so nobody really knows what construction costs, rates or demand will look like when those projects are finished. The longer the trade fight drags on, the easier it becomes to delay the project and wait.