Trade Talks Collapse: What Tariffs, Job Concerns...

Trade Talks Collapse: What Tariffs, Job Concerns and the New-Housing HST Rebate Could Mean for Resale Prices

Updated August 22, 2026

The Canada–U.S. trade dispute took a serious turn this morning.

Negotiations have been suspended, the United States has imposed 50% tariffs on approximately $20 billion worth of Canadian goods, and Canada has promised to respond “dollar for dollar.”

The affected goods represent approximately 5% of Canada’s annual exports to the United States. That may sound like a relatively small percentage, but the consequences could spread well beyond the companies directly affected.

What was previously trade uncertainty has now become an active and escalating trade conflict—and Ontario’s resale housing market will not be immune.

Why a Trade War Affects Housing

Housing markets depend heavily on confidence.

People are much more likely to purchase a home when they feel secure about their job, income and future expenses. When businesses face declining orders, higher costs or unpredictable access to their largest export market, they may delay expansion, reduce production or cut staff.

That does not mean widespread job losses are inevitable. However, even the possibility of job losses can cause buyers to postpone a move.

A buyer may qualify for a mortgage and still decide to wait six months to see what happens. When enough buyers make that decision, homes take longer to sell and sellers face greater pressure to adjust their prices.

Ontario Could Feel More of the Impact

Ontario’s economy is closely connected to the United States, particularly through manufacturing, automobiles, steel, aluminum, food production, transportation and related suppliers.

A tariff affecting one major exporter can also affect trucking companies, parts suppliers, contractors, restaurants and other businesses in the surrounding community.

Ontario’s unemployment rate was 6.8% in July 2026. Although that was an improvement from earlier levels, the labour market remains softer than many buyers and homeowners would like. Statistics Canada

Communities that depend heavily on manufacturing and cross-border trade may experience more housing uncertainty than areas supported by government, health care, education or a greater variety of industries.

Tariffs Could Keep Everyday Prices High

Tariffs are ultimately another cost.

Canadian businesses affected by retaliatory tariffs may pay more for American products, equipment or materials. Some of those costs will likely be passed on to consumers.

That could mean higher prices for household goods, vehicles, renovations and some construction materials.

Families already dealing with expensive groceries, insurance, property taxes, utilities and mortgage payments have limited room for additional costs. If everyday expenses rise, the amount buyers can comfortably spend on a home falls.

The Bank of Canada may eventually reduce interest rates if the economy weakens substantially. However, rates could remain under pressure if tariffs cause prices and inflation to rise.

In other words, the Bank could find itself trying to support a weaker economy while also controlling higher prices.

The Resale Market Was Already Under Pressure

Home prices have already adjusted from previous highs. This does not suggest a market collapse. This does show that buyers have become more cautious and price-sensitive.

The collapse of the trade talks could reinforce that cautious mood, especially if companies begin announcing layoffs or reductions in production.

The HST Rebate Gives New Homes an Advantage

At the same time, the Federal and Ontario governments are using HST rebates to encourage the purchase of newly built homes.

Eligible first-time buyers purchasing a qualifying new or substantially renovated home priced at $1 million or less may receive combined federal and provincial tax relief of as much as $130,000. The available rebate is reduced on homes priced between $1 million and $1.5 million.

That is a substantial incentive—but it is directed toward qualifying new homes, not ordinary resale properties.

Some first-time buyers who would normally consider a resale condominium, townhouse or starter home may now compare it with a new-build alternative.

This could put additional pressure on resale properties competing in the same price range.

However, buyers must compare the complete cost. New homes can include development charges, closing adjustments, upgrades, occupancy fees, landscaping expenses and construction delays. A large rebate does not automatically make every new home less expensive than a comparable resale property.

There Is Another Side to the Story

Tariffs can also increase the cost of building new homes.

If lumber, steel, appliances, equipment or other materials become more expensive, builders may raise prices, delay projects or cancel developments that are no longer financially viable.

CMHC expects housing construction to remain under pressure because of high building costs and weaker demand.

Therefore, the HST rebate may make new homes more attractive to buyers, while the trade war simultaneously makes those homes more expensive to build.

If fewer homes are constructed, Ontario could again face a shortage when the economy improves. That could eventually support resale prices—but it will not necessarily help sellers in the immediate future.

What Does This Mean for Sellers?

The trade dispute does not mean people will stop buying homes. People will continue to marry, have children, change jobs, downsize and relocate.

However, buyers are likely to become even more careful.

They will compare:

• Other resale homes
• New-home incentives and HST rebates
• Renovation and maintenance costs
• Monthly mortgage and household expenses
• Local employment conditions
• The risk of buying before prices fall further

A well-maintained home in a desirable location can still attract buyers. But a home that is overpriced based on what it might have sold for several years ago may sit on the market.

In this environment, the first few weeks of a listing are especially important. Sellers should pay close attention to showing activity, buyer feedback and competing sales.

What Does This Mean for Buyers?

Buyers may gain negotiating power, particularly when a seller has been on the market for an extended period.

However, trying to predict the exact bottom of the market is extremely difficult.

A buyer with secure employment, manageable debt and plans to remain in the home for several years may still find a good opportunity. Someone whose employment is directly exposed to the trade dispute may be wise to proceed more cautiously.

The important question is not simply, “Will prices go down?”

It is, “Can I comfortably afford this home if my expenses rise or my circumstances change?”

Our Bottom Line

The breakdown of the Canada–U.S. trade negotiations has increased the risk facing Ontario’s resale housing market.

Tariffs, possible job losses, higher consumer prices and declining confidence could reduce demand and place further pressure on resale prices. At the same time, enhanced HST rebates give qualifying new homes an advantage over some resale properties.

We do not expect every home or community to be affected equally. Local employment, property type, condition, location and asking price will make an enormous difference.

This is not a time for panic—but it is a time for realism.

Sellers need to price according to today’s market, not yesterday’s expectations. Buyers need to consider both the opportunities and the economic risks.

More than ever, good information and careful planning will matter.

Bonnie & Paul Jones
Your Friends in Real Estate
Helping families buy, sell and move for over 33 years.