Trump’s Tariffs, Canada’s USMCA Edge: A New Era for Industrial, Ag, and Real Estate?
This is the Commercial Real Estate Insights Podcast. I’m Steve Hamoen, and it is 8:00 AM on Thursday, April 3rd, 2025, here’s what we’re covering today: Canada’s advantageous position under U.S. tariffs, how a “North America First” supply chain strategy could reshape CRE in Ontario, and emerging real estate asset classes aligned with nearshoring and trade compliance.
And in other news: U.S. digital services tariffs escalate against Europe, but Canada remains insulated—potentially boosting CRE demand for hybrid office and flex tech spaces.
On April 2, 2025, the United States implemented a 10% baseline tariff on most global imports, with elevated rates for specific countries—34% for China, 25% for Canada and Mexico on non-compliant goods, and up to 54% on some sectors. However, under the USMCA, Canadian goods that meet origin and content requirements remain tariff-exempt. This creates a strategic incentive for Canada to reinforce trade alignment and compliance rather than pursue broad-based retaliatory measures.
This position offers a foundation to attract investment, expand trade, and reposition Canada as a core component in a “North America First” industrial and logistics corridor.
First, consider manufacturing and industrial real estate implications.
US-based firms affected by rising costs from global sourcing are expected to reallocate supply chains to North America. Canada’s proximity, combined with its preferential access under the USMCA, positions it as a feasible nearshoring destination.
Under USMCA rules, automotive and heavy manufacturing goods must meet specific thresholds—such as 75% regional value content and sourcing steel from North America—to qualify for tariff exemptions. Industrial zones in Ontario cities like Kitchener, Cambridge, and London offer the infrastructure and workforce needed to support such shifts. The proposition is clear: developers and investors could align their capital strategies with nearshoring activity, emphasizing logistics parks, Tier 2 supplier facilities, and multi-tenant light industrial units.
Second, the service economy remains largely unaffected by the U.S. tariff structure.
Services such as IT, legal, consulting, and finance are protected under Chapter 15 of the USMCA, which ensures national treatment and cross-border access. In contrast, U.S. retaliation against Digital Services Taxes (DSTs) has been directed toward EU countries. Canada, not having finalized or enforced a DST, currently avoids those consequences.
This status may allow Canadian-based service firms to continue operating without interruption in U.S. markets. Consequently, demand for office and tech-flex spaces—especially in suburban Toronto, Kitchener-Waterloo, and Ottawa—is expected to remain stable or increase. CRE owners in these regions may explore opportunities to retrofit or reposition space for hybrid service providers and back-office expansion.
Third, agriculture, energy, and redevelopment sectors present structural opportunities.
Canadian agricultural exports—including dairy, wheat, and meat—retain U.S. market access under tariff exemptions. Meanwhile, competitors from the EU and Brazil face increased barriers. Energy exports (LNG, crude, electricity) are also unaffected by new tariffs, reinforcing Canada’s role as a stable North American energy partner.
This shift in trade patterns could generate demand for cold storage, energy transport nodes, and agri-industrial hubs. Real estate development aligned with these categories—particularly along the 401 corridor and in brownfield sites near legacy manufacturing towns—could benefit from capital inflows and increased tenant activity.
Redevelopment opportunities are especially relevant in Chatham-Kent, Windsor, and Hamilton, where industrial land is underutilized but zoned for intensive logistics or energy reprocessing. Investors may evaluate these markets for repositioning into modernized facilities that meet compliance and ESG standards for North American trade.
Fourth, economic forecasts support a cooperative posture over retaliation.
Canada's March 2025 retaliation measures—25% tariffs on U.S. goods valued at $60 billion—introduced temporary pressure, but projections suggest continued retaliation could reduce GDP growth to zero in 2025, with further contraction in 2026.
Alternatively, maintaining alignment with the USMCA and pursuing diplomatic or multilateral channels could stabilize GDP growth between 1.5% and 2%, with upside potential if foreign direct investment (FDI) increases. This forecast is contingent on predictable trade policy, stable cross-border supply chains, and an ability to serve as a North American gateway for U.S.-bound products and services.
CRE sectors benefit most when interest rates remain stable and capital markets anticipate sustained economic activity. A cooperative trade stance contributes to those preconditions.
Strategic implications for commercial real estate include:
Industrial Land Acquisition: Prioritize regions with zoning aligned to manufacturing, warehousing, and cross-docking—especially in Ontario and Quebec.
Mixed-Use Development: Evaluate brownfield properties for repositioning into multi-use industrial and logistics campuses near infrastructure nodes.
Office and Flex Redeployment: Support digital trade firms and back-office expansion with Class B conversions and modular fit-outs in regional tech hubs.
Supply Chain Anchoring: Focus on cross-border connectivity assets—intermodal hubs, distribution corridors, and storage-intensive warehousing.
In conclusion, the prevailing trade environment, while disruptive globally, positions Canada to serve as the central node in a North American manufacturing and service ecosystem. The USMCA framework provides structural incentives for alignment over retaliation. Real estate sectors that enable, house, or service compliant economic activity—particularly industrial, mixed-use, and office-flex—stand to benefit from policy-driven demand reallocation.
Stakeholders are encouraged to monitor compliance thresholds, trade policy developments, and federal incentives such as Export Development Canada’s financing programs when evaluating asset strategies in the months ahead.
That’s all for now, but we’ll be back tomorrow. Don’t forget to hit follow or subscribe and leave a review to help others discover the show. I’m Steve Hamoen —Until next time!
