The broader economic impact of tariffs is likely to affect replacement valuesThe impact of proposed tariffs on condominium corporations in Canada Paul Murcutt, Senior Vice-President – Real Estate March 20, 2025 171 The recent announcement made by the United States to implement tariffs on Canadian imports has sent ripples through various sectors of the economy, including the real estate market. These proposed tariffs, which impose a 25% levy on imports from Canada and Mexico (with a 10% tariff on Canadian energy products), are expected to have repercussions on condominium corporations in Canada. Here are some factors to consider as we navigate through these challenging times. “It is crucial for property owners and managers to stay informed about these economic shifts and adjust their budgets accordingly.” Condo corporations may face challenges in budgeting and forecasting expenses Economic Impact The tariffs may impact the costs for building materials, many of which are imported from the United States. Monitoring is ongoing; however, it is unclear if costs for building materials will rise or fall. On the one hand, tariffs may boost sourcing within Canada which could potentially lower costs as local materials become more price competitive. However, any cost fluctuations will directly affect expenses for valuation, construction, repair and renovation of residential properties, whether for timber, steel or other essential materials. These fluctuations could have a tangible effect on replacement costs and, consequently, on the value of the properties. Supply Chain Disruptions Tariffs can potentially disrupt supply chains. Import delays could lead to increased costs for materials and services. This disruption can impact the timely completion of projects and lead to higher overall expenses. Condo corporations may face challenges in budgeting and forecasting expenses, as fluctuating costs of materials and potential delays can create financial uncertainty. Replacement Values The broader economic impact of tariffs is likely to affect replacement values. If tariffs lead to an increase in the cost of goods and materials, replacement values will rise, which may result in higher insurance premiums. Conversely, if tariffs cause a decrease in these costs, replacement values will drop, potentially lowering insurance premiums. It is crucial for property owners and managers to stay informed about these economic shifts and adjust their budgets accordingly. By doing so, they can plan their expenditures effectively and ensure they are adequately protected from fluctuations in replacement values driven by tariff-related changes. Tips to Mitigate the Impact Local sourcing can help minimize the impact of tariffs and support local businesses While the exact effects of the proposed tariffs remain uncertain, there are a few steps that condo corporations can take to proactively prepare: Budget Adjustments: Properties should review and adjust their budgets to account for the potential cost fluctuations due to tariffs. Including a buffer for unexpected expenses can help manage financial uncertainty. Long-term Contracts: Where possible, secure long-term contracts with suppliers and service providers to lock in current prices and avoid sudden cost increases. This can help mitigate the impact of fluctuating material costs. Local Sourcing: Explore options for sourcing materials locally to reduce reliance on imported goods. This can help minimize the impact of tariffs and support local businesses. Energy Efficiency: Invest in energy-efficient upgrades and technologies to reduce overall operating costs. This can help offset the increased expenses associated with tariffs and improve the long-term sustainability of the property. Insurance Review: Regularly review insurance policies and work with a specialized insurance broker. This can help condo corporations find the best coverage options at the most reasonable prices. Education and Advocacy: Stay informed about the latest developments in trade policies and their potential impact on the housing market. By proactively addressing the potential impacts of the proposed tariffs, condo corporations in Canada can better manage their financial health and continue to safeguard a high standard of living for their residents. Paul Murcutt is Senior Vice-President – Real Estate of BFL Canada, Canada’s largest independent insurance brokerage.
