Intelligent Investment

Lenders Look Past Tariff Threats And Are Gearing Up For A Much More Active 2025

Canada Monthly Market Commentary

February 27, 2025 2 Minute Read

The 30-day reprieve Canada secured against broad 25% U.S. tariffs on Canadian goods is about to expire and these tariffs are, at the moment, set to come into effect on March 4th. Uncertainty continues to hang over Canada’s outlook amid confusion regarding tariff timelines and conflicting statements from the U.S. administration. In the intervening weeks since the previous tariff deadline, the U.S. has been escalating its trade conflicts with a growing list of targets, investigations and promised reciprocal actions. All of which have led to some confusion over what specific tariff actions are being referenced in recent public statements. Shortly after headlines emerged that the blanket 25% tariffs on Canada had been postponed to April 2nd, it was subsequently clarified and the March 4th date remains in place but “pending ongoing negotiations.” The situation remains fluid with little certainty on what may or may not materialize amid the inconsistent messaging from the U.S. administration and as negotiations ramp up in the days leading to the March 4th deadline.

The impacts and outcomes of any potential tariff situation continues to be unpredictable and variable. Based on how events unfolded last month, Canada is prepared to launch targeted retaliatory tariffs of its own to which the U.S. has signaled there would be reciprocal actions. Carveouts are also expected for Canadian energy and critical minerals that would be subject to lower tariffs of 10%. CBRE Canada Research notes that sustained tariffs would weaken Canada’s already low-growth economic outlook and could lead to an eventual contraction in demand for commercial real estate space. Meanwhile, the prevailing uncertainty is hindering business decisions over the near term and could affect leasing and investment velocity.

While U.S. tariffs pose many immediate challenges for the economy, given the unpredictable nature of the trade dispute, Canadian real estate lenders do not view tariffs as a primary concern that has altered the lending environment in a material way at the moment. According to CBRE’s 2025 Canadian Real Estate Lenders’ Report, overall lender sentiment has improved for real estate and lenders are gearing up for a much more active 2025. While some challenges persist for lending in select asset classes, borrowers can expect to see greater debt availability and stronger levels of competition among lenders this year.

Economic Highlights:

  • Employment grew by nearly three times above expectations with 76,000 new jobs in January 2025 and the unemployment rate eased to 6.6%.
  • Headline inflation rose slightly to 1.9% in January 2025 and core measures CPI-median and CPI-trim also both increased to 2.7%.
  • Retail sales grew 2.5% in December 2024 across every subsector and advanced estimates suggest a 0.4% overall decline in January 2025.

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