Over the past few weeks, North America has been hit with a whirlwind of news about the U.S.-Canada trade war. While most of the coverage has focused on its broader economic impact, one critical sector is quietly feeling the effects: the rental housing market.

As the U.S. slaps ever-evolving tariffs on Canadian imports and Canada retaliates with its own, the multifamily industry is bracing for rippling consequences. With rising costs for property owners, tightened budgets for renters, and a market already in flux, the stage is set for significant uncertainty. The question is no longer whether tariffs will impact the rental market—but how severe and widespread the effects will be.

How Tariffs Are Likely to Drive Up Rental Costs

An Invisible Force Behind Rising Operating Expenses
The multifamily sector is already grappling with rising operational costs, from escalating property taxes to insurance hikes and higher maintenance fees. Now, tariffs on key imports—such as U.S.-made appliances, construction materials, and maintenance supplies—are set to drive these costs even higher, especially for property owners who rely on cross-border products for upkeep.

Some major cost impacts include:

Increased Maintenance and Repair Expenses: Everyday essentials like stoves, refrigerators, HVAC systems, and plumbing materials could become more expensive, raising the cost of routine property maintenance.
Potential Energy Cost Hikes: While Canada’s retaliatory tariffs won’t directly increase domestic energy prices, higher costs for imported U.S. infrastructure—such as transformers and transmission equipment—could lead to higher long-term electricity distribution costs.
Higher Renovation and Repair Costs: If tariffs increase the price of labor and materials, property managers might delay renovations or pass the costs onto renters through rent hikes. This also applies to purpose-built buildings currently under construction or about to begin.

Larger multifamily ownership groups may be able to absorb these cost hikes in the short term, but small and mid-sized owners—who make up a significant portion of Canada's rental market—will feel the strain the most.

A Market Already Under Affordability Pressure

Even before tariffs entered the picture, Canada’s rental market was already shifting. After a brief resurgence in January, February 2025 saw a surprising slowdown in rental demand, with active rental inquiries falling by 9.6% nationwide.

Even traditionally high-demand markets saw the effects—the top 10 rental markets experienced a 10.2% dip in active rental prospects in February, signaling a notable cooling trend in cities that usually maintain steady demand.

Now, with tariffs poised to drive up costs on essential goods and services, affordability concerns are bound to tighten renter budgets even further—perhaps even if advertised rents don’t rise immediately.

The Emotional Toll of Uncertainty

Beyond the numbers and projections lies a human reality that tariffs intensify. Renters and property professionals alike are facing mounting economic pressure that makes future planning feel uncertain. When tariffs come into play, they add another layer of unpredictability—one that both renters and landlords can’t control.

For Renters:
Many residents are already struggling with high rents, fluctuating job markets, and increasing living costs. Tariffs could push their expenses even higher, and for them, it’s not just about rent—it’s about how much they have left for savings, emergencies, or even the basics. As costs rise, renters are likely to look for ways to cut back on what they spend on housing.

This trend is already visible in the data. In secondary markets, once seen as affordable alternatives to urban cores, demand dropped by 16% in February, while tertiary markets saw an even steeper decline of 19.9%. Renters who once considered moving outside city centers to save money may now hesitate, unsure if these moves will truly be cost-effective.

For Rental Professionals:
Even landlords aiming to keep rent increases to a minimum might face tough financial decisions. If operating costs continue to rise with no immediate way to offset them, some multifamily operators may be forced to increase rents or, worse, sell properties to avoid long-term financial strain.

Could Government Policy Step In?

If tariffs do lead to a noticeable rise in rental costs, could government policy offer relief? It’s a possibility. We might see governments consider:

Temporary Rent Caps or expanded rent control measures.
Tax Incentives for rental property owners who maintain affordable pricing.
Energy Subsidies to offset rising utility costs for renters.
Low-Cost, Long-Term Financing for new rental construction, like Ottawa’s Apartment Construction Loan Program in Toronto.

However, these kinds of interventions don’t happen overnight, and if tariffs linger for the long term, rental professionals and renters may be left to navigate this uncertain landscape on their own.

What’s Next?

The next few months will be crucial in determining how significant a role tariffs will play in rent prices. Several factors will come into play:

The Duration of the Tariffs: If tariffs are temporary, rental property owners might be able to weather the cost increases. But if they persist, expect rent adjustments to follow.
How Much Cost Pressure Owners Can Handle: Larger firms might absorb these increases for a while, but smaller property owners may have to take action sooner.
Renter Behavior: As affordability becomes more of a concern, renters might seek cheaper options, leading to an uptick in demand for shared housing or suburban markets.

For now, both renters and property owners need to stay informed, monitor cost trends, and prepare for the possibility of shifting affordability and demand.

The Rental Market is Changing—Tariffs Are Just One Piece of the Puzzle

Canada’s rental market has been in flux for months, and while tariffs won’t dictate its future entirely, they add yet another layer of complexity to an already volatile landscape. Renters are feeling the pressure of inflation and high living costs, while rental property owners are grappling with rising expenses and the challenge of retaining tenants. If affordability continues to deteriorate, policymakers might step in—but for now, the future remains uncertain.

One thing is clear: The trajectory of the rental market is no longer solely driven by supply and demand. Economic forces beyond housing are shaping the future of affordability in ways we haven’t seen before.

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