Good morning. Tariffs are shaking up the real estate market and bringing back memories of early-pandemic days – more on that below, along with a defiant Greenland and Chrystia Freeland’s offer to Mark Carney. But first:
Today’s headlines
Home sales were way down in Toronto last month.Carlos Osorio/Reuters
Tariffs
The cost of uncertainty
It was the Big Three U.S. automakers who got Donald Trump to blink first. The U.S. President has agreed to pause 25-per-cent tariffs for 30 days on cars assembled in Canada or Mexico, after meeting with top officials at General Motors, Ford and Stellantis. The White House emphasized, however, that the moratorium is only so carmakers can start to move production back to the States. And while Trump and Prime Minister Justin Trudeau had a 50-minute call yesterday that “ended in a ‘somewhat’ friendly matter” – those quotes are Trump’s, on Truth Social – no other reprieve was announced.
All this tariff whiplash has been confusing, not to mention scary, not to mention straight-up exhausting. And the uncertainty is prompting a boatload of prospective homebuyers to bow out of the market altogether. Back in early January, the Canadian Real Estate Association predicted that sales would rise 8.6 per cent this year, given the central bank’s interest-rate cuts and all the pent-up demand. Now, its senior economist suspects the CREA will have to downgrade that forecast because of the risks of a trade war.
There’s coast-to-coast concern about signing up for such a big-ticket purchase: The Globe’s real estate reporter Rachelle Younglai spoke with mortgage brokers and realtors across the country whose clients have elected to hold off on their home buying plans. But no one is proving quite as wary as Torontonians. After months of rising sales, home purchases in the Toronto area fell 28.5 per cent from January to February, even after setting aside seasonal influences. (We had a bunch of snow.) That’s the sharpest decline since the first month of the pandemic, when sales fell nearly 64 per cent.
Realtors aren’t the only ones contending with early-COVID flashbacks. The on-again, off-again, back-on-again-except-maybe-not tariffs are throwing the homebuilding industry into turmoil, with developers fearing a return to pandemic-era construction cost hikes and shattered supply chains. For three decades, Canadian home construction has relied on free trade with the U.S. and Mexico to allow rebar, drywall, flooring, appliances, glass, doors and HVAC units to cross the borders. “Supply chains have gotten used to a zero-tariff environment,” Michael Waters, CEO of major home builder Minto Group, told The Globe. “Now that’s all been thrown upside-down.”
Canadians are trying hard to get out of their preconstruction contracts.Fred Lum/The Globe and Mail
This week, the White House slapped 10-per-cent tariffs on aluminum and 25-per-cent tariffs on steel, materials that are often shipped to the U.S. to be processed into building supplies and then sent back to Canada. Next week, additional 25-per-cent tariffs could be layered on top of each import. Ottawa’s retaliatory tariffs on aluminum and steel are meant to kick in two weeks after that. U.S. reciprocal tariffs are scheduled to go into effect on April 2.
So supplies are going to get expensive. And developers recognize they can’t just pass on those ramped-up costs to potential buyers – not when they were already contending with a lack of demand for preconstruction homes, and not with Canadians trying hard to wiggle out of existing contracts. “We already have a challenged industry,” Tariq Adi, chief executive of Adi Development Group, told The Globe. Stacked-up tariffs represent the “proverbial match on a gasoline-doused house.”
But current homeowners whose washing machines are all in working order will feel the pinch of the trade war too when it’s time to renew their insurance. Home insurance – which has been climbing in recent years as a result of more severe and frequent natural disasters – is expected to get pricier, as insurers factor the extra costs of home-repair goods into their premiums.
Rising premiums could also affect homeowners more quickly than car owners, since auto insurers need regulatory approval before they can increase their consumer rates. “While we don’t yet have a precise picture of the scope of these effects,” Brett Weltman, a spokesperson for the Insurance Bureau of Canada, told The Globe, “over time, tariffs will hurt consumers and families on both sides of the border.”
The Shot
‘We are not for sale and cannot simply be taken.’
A view of Greenland’s capital, Nuuk.ODD ANDERSEN/AFP/Getty Images
In his address to Congress on Tuesday night, Donald Trump had a message “for the incredible people of Greenland”: The U.S. needs control of their country for international security and “one way or the other, we’re going to get it.” Greenland’s Prime Minister Mute Bourup Egede had his own message yesterday: That’s not happening. Read more here about the fallout of yet another Trump takeover claim.
The Wrap
What else we’re following
At home: Chrystia Freeland says she’d invite rival candidate Mark Carney to serve as her finance minister if she wins the Liberal Party’s leadership race on Sunday.
Abroad: In a break from decades of precedent, the U.S. is holding direct talks with Hamas over the return of Israeli hostages amid a shaky ceasefire deal.
Off the table: Germany has moved to scrap its debt brake and unleash major defence and infrastructure spending.
On the front lines: Ukraine is in a far better position today than when the war with Russia broke out three years ago, The Globe’s Mark MacKinnon writes.
Between the covers: The young protagonist of Kate Beaton’s latest kids’ book, Shark Girl, isn’t afraid to show her teeth.
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