Christopher Wein isn't looking to boycott American products, but the chief operating officer of Canadian apartment developer Equiton says supporting business in his country matters more than ever now that the United States has officially started a trade war. So does having a supply chain he can count on.
With the U.S. imposing 25% tariffs on Canadian goods since March 4 and retaliatory measures in place, Wein said his Burlington, Ontario-based multifamily company will look domestically and elsewhere around the world for supplies. That includes everything from refrigerators to elevator parts, he said.
"The obvious effect is that certain materials and supplies are going to get more expensive," Wein said in an interview.
Across Canada, several real estate economists and analysts agree that costs will increase and threaten to disrupt a recovery that has benefited the commercial property market. The tariffs that U.S. President Donald Trump announced in February and launched Tuesday are designed to punish some of the country's largest trading partners for actions that hurt America, the White House said.
"President Trump is taking bold action to hold Mexico, Canada, and China accountable to their promises of halting illegal immigration and stopping poisonous fentanyl and other drugs from flowing into our country," the White House said in a statement this week. On Wednesday, the White House said it was exempting automakers from tariffs for a month.
As for Equiton's Wein, he said in an interview that the trade battle is likely to drive the Canadian dollar down further, adding costs because of reduced buying power. This comes amid signs of a budding economic recovery fueled in part by a series of interest rate cuts.
"At a time when the Canadian economy needs more consumer confidence, Trump has put a grenade into that," Wein said. The White House didn't respond to a request to comment on Wein's comments.
Jon Love, executive chair of Toronto-based KingSett Capital, the manager of $18 billion in funds, said his own take is to "ignore all the noise and drama south of the border and focus on what we can control (domestic free trade, resource extraction, reduce (corporation regulations) and tax etc. and move on. What doesn't kill us (tariffs won't) makes us stronger," said Love in a LinkedIn post.
Canadian leader responds with tariffs on US
Prime Minister Justin Trudeau quickly responded to the U.S. move to add 25% tariffs expected to apply to almost all goods from Canada and Mexico, along with a 10% tariff on Canada's energy exports. The Government of Canada responded by placing a 25% tariff on billions of dollars of goods imported from the U.S., taking effect immediately on a list of goods valued at $30 billion, or nearly 21 billion in U.S. dollars.
Ontario, Canada's largest province, also responded to Trump's tariffs by placing a 25% export tax on power to about 1.5 million households in Minnesota, Michigan and New York. Ontario Premier Doug Ford has threatened to cut off power exports entirely to the U.S.
"There are no winners in a trade war," said Trudeau, shortly before U.S. President Donald Trump threatened to increase tariffs because of the Canadian response.
Marcus & Millichap has said tariffs have the potential to derail a commercial real estate recovery spurred by the Bank of Canada's consecutive rate cuts. The central bank is set to meet again on March 12, and another rate cut could be back on the table because of the trade war.
"As a small open economy with over 30% of its GDP tied to a single large foreign buyer, the United States, Canada is highly vulnerable to trade barriers" from the United States, the brokerage said in a report. "Trade with the U.S. has been indispensable to Canada's post-pandemic economic recovery. Between 2021 and 2024, strong demand for Canadian oil and other goods from U.S. consumers and businesses helped Canada shift away from the trade deficit, which had persisted since the global financial crisis, to achieve a trade surplus."
As for property types, Marcus & Millichap said industrial property could be affected the most in a trade war.
"Tariffs could dampen demand across the manufacturing, warehousing and transportation industries, the industrial sector will feel an immediate impact," said Marcus & Millichap. "Development projects will likely be postponed or cancelled, but the immediate demand shock is expected to outweigh any longer-term supply-side adjustments. As a result, the national vacancy rate could rise to a higher level in 2025 than initially forecasted."
In another recent report, Colliers agreed that Canada’s industrial real estate market would likely suffer fallout from the tariffs as the relatively low vacancy rates seen in Canada over the past years have been stoked partially by Canadian consumers buying products online. However, Canadian exporters also occupy large swatches of warehouse space, Adam Jacobs, head of research at Colliers Canada, noted in a recent report. “These industries are much larger users of industrial space than office space, as they need to warehouse and distribute… so it’s possible industrial will take the brunt of the blow,” he wrote.
Housing market recovery could be damaged
Doug Porter, the Bank of Montreal's chief economist, noted a wide range of Canadian industries derive at least half of their revenue from U.S. exports.
"The housing market recovery in Canada, as gradual as we expected it to be in the absence of tariffs, could be dampened this year by the confidence-sapping trade war before resuming in 2026 on lower mortgage rates," said Porter.
The Ottawa-based Conference Board of Canada has suggested that the country start looking toward its second-largest trade partner, the European Union.
"The European Union is also facing tariff threats from the United States. As a result, Canada could shift some of its imports from American suppliers to European ones. At the same time, European buyers may look to Canada as an alternative to American products, especially for their energy needs," the Conference Board said in a statement. "Some examples of major imports that could be switched from American to European producers include passenger vehicles, aerospace products, farming equipment and pharmaceuticals."
Canada's largest pension funds have already started looking for other countries with which to conduct business.
The head of the Canada Pension Plan Investment Board, the country's largest pension fund, told a business summit in Australia this week that he aims to "diversity our economy a lot more," days after the fund sold its stake in energy U.S. energy producer Calpine Corp. and announced plans to develop condos in São Paulo, Brazil.
The CPPIB holds many real estate holdings in the United States, including 10 office properties, 22 retail properties and 33 industrial properties.
The damage to Canada's economy will not be evenly felt across all provinces, as Ontario, Quebec and Manitoba are the provinces most at risk of suffering economic harm from the tariffs, according to a new report from Desjardins. Lower tariffs on gas exports could buffer Alberta, Saskatchewan and Newfoundland. Meanwhile, Nova Scotia and British Columbia are the least likely to suffer from the tariffs, according to Desjardins chief economist Jimmy Jean.
This story was updated on March 5 to add the White House decision to delay tariffs for automakers for a month.