How will U.S.-Canada Tariffs Impact Canada's Rental Housing Market?

For the last several weeks the North American population has been bombarded with whiplash news about the U.S.-Canada trade war. For the most part, the focus has been on the impact on the larger economy, but tariffs don’t operate in a vacuum; they have a way of creeping into every industry, including the rental housing market.

With the U.S. slapping constantly-evolving tariffs on key Canadian imports, and Canada retaliating with its own, the multifamily industry is bracing for potential ripple effects. Higher costs for property owners, tighter budgets for renters, and an already volatile market create a perfect storm of uncertainty. The question isn’t whether tariffs will have an impact—but rather, how much, and where the pressure will be felt first.

How Tariffs Could Drive Up Rental Costs

A Silent Driver of Rising Operating Costs

Multifamily ownership is already grappling with increasing operational expenses due to higher property taxes, insurance hikes, and maintenance costs. Tariffs on U.S.-made appliances, construction materials, and key maintenance supplies could further drive up expenses, particularly for those who rely on imports for property upkeep.

Major cost implications include:

• Rising maintenance and repair expenses: Essential goods like stoves, refrigerators, HVAC systems, and plumbing materials could become more expensive, making routine property upkeep pricier.
  
  
• Potential increases in energy-related costs: While Canada’s retaliatory tariffs won’t directly raise domestic energy prices, they could increase long-term electricity distribution costs if imported U.S. infrastructure components—such as transformers or transmission equipment—become more expensive.
  
  Additionally, if tariffs affect cross-border fuel imports, provinces that rely on U.S. natural gas or refined petroleum could see indirect price shifts, impacting heating costs in certain rental markets.
  
  
• More expensive renovations and repairs: If property managers end up paying more for labour and materials, property operations may hold off on renovating or improving properties, or pass costs to residents through rent increases where possible. This also holds true for purpose-built buildings currently under or about to start construction.
  
  For large multifamily ownership with deep pockets, absorbing these costs might be feasible in the short term. But small and mid-sized owners (who make up a significant share of Canada’s rental market) will feel the impact the most.

A Market Already Facing Affordability Pressure

Even before tariffs entered the equation, the rental market was shifting. After a brief rebound in January, February 2025 saw an unexpectedly sharp slowdown in rental demand, with active rental prospects declining by 9.6% nationally.

Even in high-demand markets, prospect activity cooled—the top 10 rental markets saw a -10.2% drop in active prospects in February, a noticeable slowdown for cities that typically have steady growth​.

Now, with tariffs potentially raising the cost of home essentials, utilities, and maintenance services, affordability concerns could tighten renter budgets further—even if advertised rents don’t immediately increase.

The Emotional Side of Market Uncertainty

While numbers and projections tell part of the story, there’s also a human side to the tariffs. Renters and rental professionals alike are already dealing with economic pressures that make future planning difficult. Add in tariffs, and you introduce another layer of financial uncertainty—one that neither group has much control over.

For Renters:
Many residents are already navigating high rents, job market shifts, and rising living expenses. If tariffs push their costs higher, it’s not just about rent—it’s about how much is left over at the end of the month for savings, emergencies, or even basic necessities. As those costs rise, renters will undoubtedly look to reduce the amount they can allocate to paying rent.

The shift is already visible in demand patterns. Secondary and tertiary markets—once seen as viable affordability-driven alternatives—are also seeing demand shrink. In February, rental demand in secondary markets declined by -16.0%, while tertiary markets saw the steepest drop (-19.9%)​. Renters who once considered moving further outside urban cores may now be hesitating, unsure if those moves will actually save them money.

For Rental Professionals:
Even those who want to keep rent increases minimal may find themselves in a financial bind. If operating costs continue to rise without an easy way to offset them, some multifamily operators may have no choice but to increase rents or offload properties entirely.

Could Government Policy Step In?

If tariffs cause a noticeable rise in rental costs, could we see policy responses to cushion the impact? It’s possible. Governments might consider:

• Temporary rent caps or expanded rent control measures.
• Tax incentives for rental properties who maintain affordable pricing.
• Energy subsidies to offset rising utility costs for renters.
• Low-Cost, Long-Term Financing for new rental construction from the Federal Government.
  • Like those offered in Toronto, through Ottawa's Apartment Construction Loan Program (reported via the CBC)

But such interventions don’t typically happen overnight, and if tariffs remain in place for the long haul, rental professionals and renters alike may be left to navigate these challenges on their own.

What Happens Next?

The next few months will be critical in determining whether tariffs will have a direct impact on rent prices or if rental properties find ways to absorb the costs.

Much of this will depend on:

• How long the tariffs last: If they’re temporary, it might be possible for rental property owners to ride out the cost increases. If they’re prolonged, expect more rent adjustments.
• How much cost pressure rental property owners can handle: Larger companies may absorb short-term increases, while smaller ones may need to act sooner.
• Renter behaviour: If affordability concerns push more residents to seek cheaper living arrangements, we could see increased demand for shared housing or in suburban markets.

For now, renters and property owners should stay informed, monitor cost trends, and prepare for potential shifts in affordability and demand.

The Rental Market is in Flux—And Tariffs Are Just Another Variable

Canada’s rental market has been shifting for months, and while tariffs alone won’t dictate its future, they add another layer of complexity to an already volatile situation.

Renters are feeling the squeeze of inflation and high living costs. Rental property owners are balancing rising expenses with resident retention. And policymakers may need to step in if affordability concerns grow too pressing.

For now, one thing is clear: The rental market’s trajectory is no longer just about supply and demand. It’s about economic forces far beyond housing—ones that will shape affordability in the months to come.

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