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The recent escalation in trade tensions between Canada and the United States, marked by the U.S. imposing a 25% tariff on Canadian imports, is poised to significantly impact Toronto's real estate market. These tariffs are expected to increase the cost of construction materials, such as lumber and steel, leading to higher expenses for builders. This rise in construction costs may result in increased prices for new homes and could potentially slow down the initiation of new housing projects, thereby affecting the overall housing supply in Toronto.

Beyond the direct impact on construction costs, the broader economic implications of a trade war could further influence Toronto's housing market. Economic uncertainty stemming from reduced trade activity may lead to job losses and decreased consumer spending, factors that traditionally dampen demand in the housing sector. Prospective homebuyers might become more hesitant to make significant financial commitments, potentially leading to a slowdown in home sales and a softening of property prices in the region.

Additionally, the Bank of Canada is anticipated to respond to the economic turmoil induced by the trade conflict by cutting its main interest rate for the seventh consecutive time, reducing it to 2.75%. While lower interest rates typically make borrowing more affordable and can stimulate housing demand, the prevailing economic uncertainty may counteract this effect. Potential homebuyers could remain cautious, concerned about job security and future economic stability, which may lead to a more subdued response to the lower borrowing costs.

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