SPECIAL MEMO TO MEMBERS: TARIFFS & BC BUDGET

Dear HAVAN Members,

Like all of you, we are disappointed – although not surprised – that U.S. President Donald Trump re-instated the 25% tariffs on imported goods coming from Canada, and 10% on Canadian energy products today. With the constant barrage of disrespectful references to Canada, its leadership and sovereignty by the President throughout the 30-day tariff pause, Prime Minister Justin Trudeau spoke to “Donald” at this morning’s press conference from Ottawa, announcing the retaliatory tariffs of 25% on $155-billion worth of American goods, with the first phase of tariffs on $30-billion in U.S. imports taking effect this morning.

Impact on the Homebuilding Industry

As discussed in a previous Monday Morning Briefing, there are overall impacts of the tariffs that concern this industry:

• Overall economic uncertainty and lower homebuyer confidence can negatively affect housing starts and purchases
• Weakening of the Canadian dollar can increase cost of goods
• Supply chain and construction costs – this affect will vary, depending on where companies are sourcing their products, and the inbound US.. products that will be included on the countervailing tariff list. Larger-scale projects will likely be more vulnerable due to project timelines — between projects being greenlit to when products are ordered, and noting materials that are not easily sourced from non-U.S. companies like steel and aluminum.
• Inflationary pressures with central banks possibly responding to inflation with interest rate adjustments, which affect mortgage rates and financing costs. The Bank of Canada is predicted to announce an interest rate reduction on March 12 so we will be watching to see if and if so, by how much.

Your Association in Action

CHBA National has been in continual dialogue with the Government of Canada on the issue, initially recommending that Canada’s countervailing tariffs avoid construction materials. However, given the need to combat the U.S. tariffs with Canada’s own tariffs, CHBA has also worked closely with government officials to provide advice on how to best target U.S. imports with the minimum impact on Canadian businesses and construction costs, for example by looking to product categories where there is ample supply from other countries to turn to.

To help Canada’s industries and businesses, the government is taking steps to mitigate the impact of these countermeasures on Canadian workers and businesses by establishing a remission process to consider requests for exceptional relief from the tariffs imposed as part of Canada’s response to the U.S. applying unjustified tariffs on Canada. The first phase list was released last month, and the second phase list was released today, with over 4,416 product categories, which CHBA is working through. CHBA will be working on members’ behalf to ask for remission on any key items that would cause hardship to the residential construction industry as a result of the countervailing tariffs. CHBA will also continue to be in close dialogue with the federal government on this issue.

Listen to what CHBA CEO Kevin Lee had to say today on the issue of the tariffs.

HAVAN will continue pushing local governments to reduce their own imposed costs and fees, and other barriers to housing viability to support this industry and help mitigate the impact the tariffs will have on the housing market. I was interviewed on CBC Radio today to provide comment on the impact of the tariffs on our industry, and HAVAN will continue to provide a voice for members on this issue.

BC BUDGET 2025

It’s been an eventful day — in addition to the tariffs announcement, the BC Budget 2025 was unveiled this afternoon. As expected, the tariffs “trumped’ over other priorities in the budget, and housing did not see any major announcements.

Earlier today, the NDP Provincial Government released the 2025 Budget and Fiscal Plan, with its priorities remaining in alignment with the Throne Speech delivered last month:

• defending BC against the impact of above-noted tariffs
• strengthening health care and services people rely on
• ensuring a strong, diversified economy
• making communities stronger and safer
• lowering costs and providing affordable homes

Our CHBA BC colleagues were in Victoria today and confirmed that for the homebuilding sector, new commitments were scarce in the budget. CEO Neil Moody expressed that “CHBA BC was disappointed to see a lack of new or additional commitments to streamline approval processes, prioritize growing skilled trades, reduce the cost to build homes, and enable low carbon solutions for new homes – all key CHBA BC advocacy priorities.”

There were some tidbits about continued efforts to address the cost of delivery of housing crisis that highlighted additional funding for BC Builds, increasing the speculation and vacancy tax, additional investments in the Rental Assistance Program and Shelter Aid for Elderly Renters program and finally an increased ICBC rebate and the continuation of a climate action tax credit.  Here’s the details found in the Budget Backgrounder:

B.C. is a beautiful place to live, but too many people are facing high costs and struggling to find a place to live they can afford. Since 2017, the Province has prioritized helping people with the cost of living, including through ICBC rebates and reduced rates, eliminating medical services plan payments, expanded school food programs, fighting speculation and building homes people can afford, and financial support like the BC Family Benefit. Budget 2025 builds on government’s affordability measures with $1.1 billion over four years, beginning in 2024-25, to tackle housing affordability and provide a one-time ICBC rebate.

BC Builds
Introduced in 2024 with initial program funding of $198 million over three years, BC Builds is a housing program to speed up the development of new homes for middle-income people throughout B.C. Six projects have begun construction. An additional 11 will be underway in 2025-26. This will result in nearly 1,400 rental units for middle-income people in communities such as Abbotsford, Cowichan Nation/Duncan, Fernie, Gibsons, Lake Babine First Nation, North Vancouver, Prince Rupert, Tsawout First Nation and Whistler.  Budget 2025 builds on work underway with an additional $318 million investment in BC Builds over three years. The new funding will deliver more homes and contribute to the Province’s goal of thousands more middle-income rental units.

Speculation and vacancy tax
To deliver more homes and help ensure residential properties are used as homes rather than investments, Budget 2025 increases the speculation and vacancy tax rates. The rate for foreign owners and untaxed worldwide owners rises to 3% of their home’s value from 2%, and to 1% from 0.5% for Canadian citizens and permanent residents.

The increase takes effect Jan. 1, 2026, and will generate an estimated additional $47 million in revenue in 2027-28. This money will be invested back into housing in the 59 regions where the tax applies. It’s one more measure alongside the home-flipping tax and a tax for foreign owners to curb price escalations caused by speculators.

Support for lower-income seniors and families
Budget 2025 increases supports and helps more lower-income families and seniors with rental housing costs. New Budget 2025 investments increase monthly supports and nearly double the number of lower-income working families eligible for help through the Rental Assistance Program. By raising the income threshold for the program from $40,000 to $60,000, nearly 6,000 families will be eligible for the program, up from 3,200. The average supplement families receive will increase from $400 to $700 a month.

Up to 1,600 more seniors will benefit from the Shelter Aid for Elderly Renters program as Budget 2025 increases the income threshold from $37,240 to $40,000. The average supplement seniors receive will grow from $261 to $337, an increase of 30%.

ICBC rebate
To help people and businesses facing high costs, Budget 2025 provides a one-time rebate of $110. In total, the rebate is expected to return $410 million to personal and commercial policy holders.

Climate action tax credit
The climate action tax credit will continue to help lower-income British Columbians while the national carbon tax remains in place. All of the incremental revenue from the federally required April 1, 2025, carbon tax increase will continue to go back to people through the tax credit.  The Province remains committed to removing the consumer carbon tax should the federal government remove the requirement for carbon pricing across Canada.