Trump's Tariffs or Falling Rates: What Drives Toronto Housing

As of March 2025, the stronger force in Toronto's housing market is the fall in interest rates, not Donald Trump's tariff war. Tariffs make investors cautious, and that matters. But this is an end user market, and an end user decides on the monthly payment, not on the day's headline. My call for the first half of 2025 is a slow market, not a crash.

I am Moe Asgarian, a senior real estate broker in Toronto and ranked 47th worldwide inside RE/MAX. I wrote this in mid February 2025, when it felt like six months of 2025 had already passed because every single day brought another tariff story. This is what I was telling my own clients at that time.

Two Facts to Hold at the Same Time

The first fact is that the stop and start of this tariff story makes the Canadian economy, and the Canadian housing market in particular, feel unsafe. An investor wants to bring money into this market and is afraid the fire of this trade war will reach them. That fear is real, and I am not going to talk anyone out of it. It is not pleasant to wake up in the morning waiting to see what somebody else has decided about your future.

The second fact is that bad markets and good markets exist everywhere, in every condition. What matters is whether you can make the right decision inside the market you are standing in. Plenty of people bought in excellent, busy markets and still lost, because they paid far above a property's real value and then got stuck with it. Plenty of others used the discount a flat market offered and did well. Many of my own clients took full advantage of low rates and low prices at the peak of COVID, and those turned into good investments. In a market like early 2025 you can still study it properly and make a sound decision.

Why End User Buyers Keep Toronto From Falling Hard

If we look at real numbers, the Toronto housing market in 2024 was a market of end users, and as of early 2025 I expect the same thing again this year. Rates and the cost of carrying a home have not come down far enough to make the math attractive for an investor. That single fact answers a lot of the question, because the end user is what always stops a market from falling off a cliff.

End users make up the large majority of this market, and on my reading as of February 2025 about 40% of them are first-time buyers. Unlike investors, these buyers do not give much weight to political swings. What matters to them is the mortgage, the payment and the monthly cost of running a home. They actually have to live in the house. They look at the arithmetic, see that with lower rates buying beats paying rent, and move. Experience has shown me that the moment a couple or a family believes they can handle the payments, they start shopping. In practice, the effect of rates coming down is much bigger than the effect of the tariff war.

Two other things help. One is government support. The backing for homebuyer mortgages up to $1.5 million, as it stood in early 2025, showed its effect on that part of the market even over a short period. When the market is relaxed about the government ultimately standing behind housing, it operates with more confidence. The other is how buyers think about time. A home is a long project for all of us. You will not find a family that hunts for the ideal place and then says they want it for three months. They are thinking about two or three years at the very least, and the average stay can reach ten years. So the swings and the tariff war matter, but in a buyer's mind their effect is shorter lived than the effect of buying a home.

What Happened the Last Time Trump Used Tariffs

We are dealing with a president who did this in his first term too, so it is worth knowing where those tariffs ended up. Trump started applying tariffs from January 1, 2018, on things like solar panels and imported dishwashers. A few months later came 25% on steel and 10% on aluminum, aimed at several countries. Later the same treatment reached the European Union, Mexico and my beautiful four-season Canada. Other countries went to work and put tariffs on American imports in return. India did it, China did it, Canada did it.

The part worth noticing is that the tariffs on Canada were temporary. They were applied from July 2018 and they were lifted in May 2019. Canada and Mexico managed to negotiate their way out with Trump and his team. After all that noise, the United States, Canada and Mexico turned NAFTA into a new agreement, USMCA, which took effect on June 7, 2019. The whole affair finished inside a year.

There is a solid reason for that. Putting a tariff on is very fast, but you cannot fill the hole left by those imports quickly. Suppose you stop car imports with a tariff. It takes years to build factories at home, and the whole time cars inside your own country get more and more expensive. After that episode, research in the United States found the tariffs reduced American income overall, and some analysts concluded the effects were one of the reasons Trump lost the following election, because the taxes people paid rose in an unprecedented way. For Canada, the experience was a one-year experience, from July 2018 to June 2019.

My Forecast for the First Half of 2025: Slow, Not Collapsing

So here is my prediction as of early 2025. The first half of the year is a slow market, but it is not so easy for this market to fall on its head. Why? First, because housing here is a market of end users. Second, because there is a serious hope that the tariff war does not drag on, the same way it did not drag on in Trump's previous term. The United States cannot really keep these tariffs going for a long time, because the pressure lands on the American economy as well. Worried about a slowdown, yes. Afraid of a collapse, no.

The honest risk sits on the investor side. In the news and in the expert reactions I was reading in early 2025, I kept picking up the same worry: if some investors were planning to enter this market in 2025, these threats could make them hold off and be a little more careful. The first thing uncertainty and lost trust do is make an investor cautious, and for the Toronto housing market that is not good news.

The Thing I Actually Worry About Is the Job Market

Beyond that psychological effect, my real concern as of early 2025 is the job market. I genuinely hope the tariff business passes quietly, because otherwise the job market suffers, and the job market has always had a direct effect on housing. If Trump's tariffs really are applied to all Canadian goods and really do stay in place for a long time, serious economic worries follow. That would reach housing through employment, not through headlines.

In a market like this, more than at any other time, you need to make the right decisions and look at every side of the picture. If you want to go through your own situation with someone who watches these numbers for a living, fill out the form at the bottom of this page or book a free consultation with our team. Stay well and take care.