Tariff politics puts 2026 housing and mortgage outlook on a knife edge
Canada’s housing and mortgage markets head into 2026 with trade tensions hanging over almost every forecast, even as interest rate cuts and improving inventory offer some relief for borrowers and brokers.
In a recent outlook for Royal Bank of Canada, John Stackhouse frames the year ahead around United States president Donald Trump’s tariff agenda and Canada’s response.
Trump cast tariffs as a political and economic calling card, boasting that they are bringing “record investment to the U.S.” and would help pay for a “warrior dividend” to 1.45 million US military personnel. He also claimed tariffs are “leading to lower prices.”
Stackhouse suggests that even if the US Supreme Court ruled the president has overstepped, the White House could quickly rebuild the tariff wall using Section 122 and 301 powers, with average rates sliding from about 16% to “perhaps 10%.”
For Canadian mortgage professionals, the bigger question is how prime minister Mark Carney would navigate a drawn‑out Canada–US–Mexico Agreement (CUSMA) review while managing a housing market still in recovery mode.
Canada and the US are set to launch formal talks in mid‑January to review their free trade agreement, opening a high‑stakes process for sectors from autos and steel to housing and mortgage credit.
Stackhouse flags three pressure points: digital services, softwood lumber and auto rules of origin.
Softwood lumber remains a flashpoint. Carney recently said Canada is “very ready” to strike a forest‑products deal with the US, which faced affordability challenges, including in the housing sector.
He argued that lower tariffs could make an immediate difference to affordability in the United States while supporting Canadian workers. For Canadian builders, continued lumber frictions risk higher input costs and delayed projects on both sides of the border.
Carney also warned there was “not a lot of evidence right now” that Washington would agree to a tariff‑free pact. Alberta Central chief economist Charles St‑Arnaud told Canadian Mortgage Professional that firms would still need to invest time and money to secure CUSMA certification even under a compromise deal.
Within the industry, tariffs have already been called the biggest question mark hanging over Canada’s 2026 housing outlook, even as Bank of Canada cuts – totalling 275 basis points since mid‑2024 – helped pull mortgage rates lower.
Trade uncertainty kept the market in a holding pattern through 2025, REMAX Canada president Don Kottick said, noting that many buyers stayed on the sidelines.
Brokers also flagged the policy juggling act ahead. “With US tariff risks and global economic pressures, mortgage rates may remain volatile,” Tracy Valko, founder of Valko Financial, told CMP, adding that Ottawa needed to balance affordability with fiscal discipline to avoid pushing bond yields higher.
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