Tariff tensions have left parts of Canada’s development sector hesitant but the slowdown in construction is sparking new ways to improve the industry beyond trade frictions with the U.S.
“Everyone’s thinking is evolving around how we can improve matters,” says Audrey Jacob, managing director for Places Canada, Arcadis, a global design, engineering and consultancy firm.
The One Canadian Economy Act (Bill C-5), passed in the House of Commons earlier in June, is designed to eliminate interprovincial trade barriers and fast-track infrastructure projects.
Jacob says the country has “been catapulted” into a new direction by the U.S. administration’s tariff and trade tensions.
She suggests a “more aligned business code” for trade across Canada will allow for freer movement of labour, materials and related matters.
“Sometimes it takes something major to get people to change their way of thinking and then get us into a totally different opportunity. I think where there is political will, it will be achieved.”
In May Arcadis released a report called International Construction Costs 2025, which analyzes construction cost trends across 100 cities worldwide and highlights how tariffs and trade tensions are influencing investment strategies and project viability.
Geneva, London and New York feature among the top of the ranking for 2025. Currency movements, inflation variability and market-specific trends all play a role in reshaping the cost landscape, Arcadis states.
While the GTA’s average construction costs are the second highest in Canada (Vancouver leads at more than $3,000 per square metre), Toronto is not among the top 10 most expensive cities to build in, according to the report.
Still, housing has slowed in much of Ontario largely because of high costs.
Several factors that could be “incredibly helpful” to boosting housing starts include interest rate cuts, the removal of the HST on new housing and the deferral, reduction or elimination of development charges, “which are highly impactful to the ultimate price of a unit,” Jacob says.
Building code reform could also benefit the development community.
“The industry thinks in some ways relative to other jurisdictions that we are over-regulated in many ways.”
In addition to development charge reductions, many developers would like to see a scale-back of municipality-imposed green standards, replaced “more generally” into the building code.
“We’re all for improved standards of sustainability but they all have to align better across the business as opposed to being quite bespoke.”
Jacob says reduced immigration factors into the slowdown in residential construction in the GTA and Ontario and measures taken by the federal and Ontario governments to tighten post-secondary admission requirements for foreign students could also be a factor.
Unlike Ontario, Alberta’s housing starts are up. In the first quarter of 2025 starts have “almost doubled” to about 12,000 units over the past decade’s Q1 starts of roughly 6,000 units.
“It’s a significant increase,” says Jacob, adding most of the starts are divided between Calgary and Edmonton.
Jacob says the potential increase in demand for oil and gas through the growing dialogue for cross-Canada initiatives and the removal of interprovincial trade barriers are likely factors behind the population surge.
Despite slowdowns of residential construction in many regions, the industrial sector remains active.
As an example, Arcadis is in the design process to deliver a battery plant and other facilities for a major auto manufacturer.
While uncertainty due to tariffs has played into delays of construction starts, design work remains on track, Jacob says, adding Arcadis is also working with another major auto builder to deliver a retooling and renovation of an engine plant.
The U.S. government’s lack of support for the EV automotive industry could hamper the Canadian sector’s progress, she says.
The tariffs have not had any major impacts yet in the transit arena.
The 15.6-kilometre Ontario Line under construction in Toronto and three “pretty massive” Greater Toronto Airport Authority projects out for RFPs are among key projects proceeding.
In B.C., Arcadis is engaged in two major transit projects, including Vancouver’s Broadway Subway project, a 5.7 kilometre extension of the Millennium Line.
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