Court ruling mattered less than what happens at the CUSMA table
Canada’s mortgage market has already been looking past Washington’s courtroom drama to a more familiar pressure point – the next round of Canada–US–Mexico Agreement (CUSMA) negotiations and what they would mean for trade‑driven growth, inflation and funding costs.
The latest analysis by RBC Economics argued that the US Supreme Court’s decision curbing the use of the International Emergency Economic Powers Act (IEEPA) for broad tariffs changed less for Canada than headlines suggested.
The court removed authority to collect IEEPA tariffs going forward, but other tools, including Section 232 and Section 301, remained available for a future US administration to re‑impose duties.
IEEPA measures accounted for about 60% of recent US tariff revenue, with the rest coming from those other statutes.
The United States’ Supreme Court has ruled that President Trump violated federal law by imposing a sweeping international tariff regime last year, a bombshell ruling that could have huge implications for Canada-US relations and the ongoing trade war.https://t.co/N8E1AejsGM
— Canadian Mortgage Professional Magazine (@CMPmagazine) February 20, 2026
RBC said the bigger issue for Canada is preserving the tariff exemptions embedded in CUSMA.
“Most Canadian exports are already exempt from IEEPA tariffs via an exemption for CUSMA compliant trade,” the report said.
“Other product specific (section 232) tariff measures have been a larger issue for the Canadian economy and those were not impacted by the court ruling.”
RBC’s baseline forecast for 2026 rested on the assumption that “CUSMA exemptions will be preserved to maintain lower‑friction bilateral trade with the U.S.”
The economists added that “maintaining free trade under CUSMA – including through negotiations to extend the agreement later this year – as more important for the Canadian external demand outlook than court rulings.”
Canada’s tariff edge, and what it meant for housing
RBC estimated that 89% of Canadian exports to the US in December faced no tariffs because they met CUSMA rules of origin, leaving IEEPA measures effective on less than 5% of shipments. That helped keep the average effective US tariff on Canadian goods around 3.1%, the lowest among major trading partners.
The same exemptions effectively lowered the US average tariff by about six percentage points, particularly benefiting import‑heavy US states where Canada was the top supplier.
If those exemptions frayed while IEEPA‑based tariffs on other countries remained off the books, Canada could lose its status as the lowest‑tariff supplier even as US industrial activitym and demand for imports, picked up.
RBC framed Canada’s trade risk as a balance between “Canada’s competitive position in the U.S. import market” and the broader strength of US import demand. The removal of IEEPA tariffs, if not replaced, would likely weaken the former but support the latter, leaving the net impact on Canada’s economy finely balanced.
Brokers already watched tariff turmoil
For mortgage professionals, the link between trade policy and deal flow is not new. The economic uncertainty surrounding tariffs has created caution in the mortgage market, as higher trade barriers can fuel inflation and increase borrowing costs. This has also affected housing affordability and employment in industries most exposed to tariffs.
Additionally, many prospective homebuyers pushed ahead with purchasing plans even as central‑bank rate cuts were delayed while policymakers assessed trade‑related inflation risks.
A Nanos Research survey revealed that 67% of Canadians believe a deal to lower tariffs is unlikely in the next six months. Just 28% believed a deal was likely, and 3% were unsure, highlighting growing doubt as negotiations stayed stuck.
Micky Khaneka, broker with DLC Clear Trust Mortgages, observed that after months of back-and-forth headlines, most clients have grown accustomed to the noise and are no longer hesitating because of it.
“It is something that I’m assuming people watch, but it’s not something that has the topmost importance to people,” Khaneka told Canadian Mortgage Professional.
He added that buyers are increasingly focused on long-term goals rather than short-term headlines.
“I think a lot of people start to focus also on, ‘Okay, if this is a home that I’m planning to live in five to 10 years, does renting make sense for me or do I see myself buying? And if I’m going to buy, how much am I saving and how much am I paying?’ So I’m seeing that buyers are getting more and more knowledgeable and they’ve started to put up with the amount of news that’s coming at us better.”
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