Canadians are stuck between a rock and a hard place, most likely CSA G40.21 (steel joke, sorry). To protect domestic producers, policymakers slapped tariffs on steel imports last year—and went nuclear with counter tariffs when the U.S. declared a trade war. The result? Collateral damage for industries like real estate, where higher input costs are amplifying the housing crisis and grinding the industry to a halt. Are tariffs saving jobs, or shifting the pain to other areas? Let’s crunch the numbers behind a policy that’s heavy on narrative and light on data.
Steel Tariffs Saving Jobs and Inflating Home Prices
Tariffs are government-imposed taxes on imports designed to protect domestic industry and raise revenues. Consumption of foreign products is deterred by making them artificially more expensive. In the case of steel, Canada isn’t just imposing counter tariffs on the US—it began steel tariffs before the current U.S. administration took office, citing an excess of supply can push prices lower and create less demand. Lower prices mean fewer jobs (or lower profits).
Canada’s steel prices have acted as a stealth tax on new housing input costs. Steel tariffs add 4-6% to homebuilding costs, with the shift to multi-family high-rise buildings pushing those numbers closer to the high end of the range. In some cases, this also results in project delays that push costs even higher.
Tariffs are meant to incentivize local demand, but domestic steel is already the primary source of steel for homebuilders. Transportation costs and the specialized need for local steelworkers means the industry isn’t as easily substituted as presented. However, specialized components still need to be imported and domestic producers don’t offer certain products or the materials just aren’t available.
Canadian Steel Tariffs May Protect Hundreds of Jobs… or Not
Canada’s steel industry supports thousands of well-paid jobs—about 23,000 directly. Naturally we should want to preserve them, with typical tariff safeguards estimated to save roughly 5% of the domestic steel industry, about 1,150 jobs. It’s even higher when adding estimates of jobs in related industries, which can double that number.
Whether the losses would be that high isn’t exactly clear. When the US implemented steel tariffs in 2018, analysts estimate it destroyed 5x more jobs for steel workers in manufacturing than it protected directly. Penny wise, pound foolish—a theme that tends to continue throughout the tariff math problem.
The prevailing belief that lowering steel prices alone will cause job losses is also a little rich. For example, HRC steel prices are up 84% from 2019, while unionized steel workers have seen their wages rise roughly 20% over the same period. The rigid link between current prices and employment doesn’t hold up.
However, let’s ignore that the tariffs reduce steel opportunities for related industries. Ditto with the skepticism that any price declines can be taken. Assume the high water estimate of double the direct losses—2,300 jobs can be lost. It would be a direct blow to a skilled industry, amplified by the concentration of employment in Quebec and Ontario communities. No one wants to see that, but is it better or worse than the direct impact made on other industries?
Canadian Steel Tariffs, Weak Housing Demand, & 40,000 Lost Jobs
Canada’s new home sales saw weak demand even before its population growth was throttled. Greater Toronto, once the darling of global real estate demand, just saw the fewest new homes sold on record. Builders have no shortage of homes, prospective buyers just can’t afford them. Typically prices would fall until demand picks up and activity is restored, but builders have a problem—input costs are too high. Steel tariffs have only intensified this problem.
Let’s run some napkin math on this additional cost. Assume a conservative steel tariff impact of $30,000 per unit, about ~4.3% of the benchmark home. Let’s also assume 200,000 new homes per year, which is lower than the current rate and well below the 500,000-unit policy target. That’s roughly $6 billion in disposable income diverted from consumption to cover the tariffs.
Canadian industry experts estimate $1 million final domestic demand supports the creation of 6-10 jobs. In the best case that’s a new job per $100k, but once again—we tend to be realists, so we’ll go with $150k per job—requiring 50% more spending. That $6 billion in diverted disposable income means 40,000 fewer jobs in just one year—over 17x the jobs policymakers fear losing.
This is just the impact on new home sales—without factoring in other industries or secondary effects. One clear casualty will be GDP: Greater Toronto’s new home sales are down 71% from the 10-year average, wiping out $652 million in spin-off activity. And that’s just one city. Canada has a few more, last time we checked.