Author’s Note
Each week on this blog, I break down the economic story most likely to impact the real estate market, especially here in Colorado, where most of our clients live, invest, or build.
This week, the headlines are locked on Trump’s tariffs and their effects on Europe and Asia. But the real story, the one that’s flying under the radar, is Canada. And frankly, it could have the biggest impact on U.S. housing markets nationwide, Colorado included.
At the center of this is Mark Carney. His failure to strike a trade agreement with the U.S., despite months of signals and opportunities, was a serious miscalculation. Carney acted as if Canada held leverage, it didn’t actually have, and now the consequences are piling up.
In retaliation, Canada is expected to impose tariffs on critical exports to the U.S., including lumber, aluminum, and construction-grade steel. These are the backbone materials of both residential and commercial real estate. From the studs behind your drywall to the aluminum in commercial window frames, these price hikes will hit hard, and fast.
And here’s the harsh reality: when commodity prices like these go up, they almost never come back down.
This isn’t just about economics. It’s about affordability, supply chains, and the future cost to build or renovate a home in the U.S. The media may be quiet about it, but if you’re in real estate, you can’t afford to be.
Foreign Crisis with a Colorado Price Tag
What happens in Ottawa doesn’t stay in Ottawa. As of August 1, 2025, the United States has entered a formal trade war with Canada, triggered by a sweeping set of tariffs signed by President Trump. The most critical targets: Canadian steel, aluminum, and softwood lumber, materials that underpin Colorado’s construction, real estate, and manufacturing sectors. The consequences are already being felt on job sites and balance sheets statewide.
The administration’s policy imposes a 25% tariff on general Canadian goods, a 50% tariff on all steel and aluminum, and a 10% levy on Canadian energy products (The Globe and Mail, 2025). According to the National Association of Home Builders, tariffs of this scale are projected to increase the cost of building a single-family home by approximately $9,200 (Craig Daily Press, 2025). Steve Swinney, CEO of Colorado-based Kodiak Building Partners, projects that home prices across the state could rise by 2.5% if trade tensions persist (Vail Daily, 2025).
Yet trade policy is only half the storm.
Canada is facing its own internal breakdown. Western provinces, particularly Alberta and Saskatchewan, are increasingly vocal about secession, not because of U.S. pressure, but due to long-standing frustration with Ottawa’s centralized control, overregulation, and sweeping gun policy restrictions. That dissatisfaction is gaining traction under the banner of the “Wexit” movement.
Much of this turmoil stems from failed diplomacy. Former Bank of England governor Mark Carney, now a senior figure in Canadian economic policy, declined to finalize a trade agreement with the U.S. earlier this year. Carney reportedly overestimated Canada’s leverage and misjudged the likelihood of unilateral U.S. action. His miscalculation is now triggering retaliatory tariffs from Ottawa on American imports, including energy and manufactured goods critical to Colorado’s export economy.
In short, this is no longer a theoretical standoff. It’s an economic cascade with real implications for affordability, housing starts, supply chains, and capital investment across Colorado. Prices are rising. Confidence is faltering. And the effects, like the policies behind them, may be longer lasting than anyone expected.
The Current Tariff Landscape: Where Colorado Stands
On August 1, 2025, President Trump implemented a sweeping set of tariffs aimed at Canada and Mexico, reshaping the cost structure of key imports that directly affect Colorado’s housing and construction sectors. The package includes a 25% duty on general imports, a 50% tariff on all steel and aluminum, regardless of country of origin, and a 10% levy on Canadian energy products (The Globe and Mail, 2025). While temporary exemptions have been discussed, none have been formally implemented as of this writing, and any relief remains politically and economically uncertain.
For Colorado builders, the exposure is significant. Canada supplies approximately 84.3% of all U.S. softwood lumber imports, though this now represents just 24–30% of total U.S. softwood lumber consumption (PR Newswire, 2024, Visual Capitalist, 2024). On the aluminum front, Canada accounts for roughly 58–60% of all U.S. aluminum imports, amounting to over 3 million metric tons in 2024, and supplying over half of U.S. aluminum consumption (Aluminum Association, 2024, USGS, 2024). In steel, Canada remains the largest foreign supplier to the U.S., accounting for 23% of total U.S. imports in 2024 (Al Jazeera, 2024).
This chart shows current price trends BEFORE the tariffs take place. Costs on these items imported from Canada are expected to rise exponentially over the next few months.
These cost increases are not theoretical. CU Boulder economics professor Keith Maskus explains, “Tariffs are passed through in higher costs at the input stages and all the way through the consumer goods stage” (Craig Daily Press, 2025). In a state where labor shortages and rising land costs already strain affordability, compounded material inflation could delay new projects, reduce supply, and price out working families.
The Chain Reaction: How Tariffs Distort the Entire Housing Economy
The impact of tariffs isn’t confined to materials. As costs climb, builders are forced to seek new financing, delay starts or reduce the size and quality of homes. Banks tighten lending requirements as construction risk increases. Developers postpone land acquisitions. Subcontractors raise their bids or cut labor hours.
The result is a tightening of the entire pipeline. Fewer homes get built. Existing homes are becoming more expensive. And low- to middle-income buyers are pushed further out of the market.
According to the Colorado Association of Home Builders, as many as 4,000 new homes could be removed from the market in 2025 due to tariff-related inflation (Colorado Association of Home Builders, 2025). In a state already undersupplied by tens of thousands of housing units, that’s a devastating blow.
Meanwhile, projects that do get built often come with compromises: fewer energy-efficient features, downgraded finishes, or stripped-back amenities. In effect, tariffs are eroding the quality of housing as well as its affordability.
And the psychological impact matters too. Buyers sensing instability may rush to lock in deals or delay purchases entirely. Appraisers struggle to price homes accurately amid constant volatility. Market friction increases across the board.
Colorado’s Export Economy: The Quiet Casualty of Canada’s Political Upheaval
While most of the conversations around tariffs have focused on rising import costs, steel, aluminum, and lumber driving up the price of new homes, Colorado faces a second, more subtle threat: the erosion of its export economy. It’s a one-two punch that hits both sides of the ledger. As construction costs climb, Colorado may also lose revenue and job stability tied to declining trade with its most important foreign partner: Canada.
Canada is not just a supplier of building materials. It is Colorado’s number one export destination, accounting for $1.8 billion in goods exported in 2023, or roughly 18% of all state exports, more than any other foreign country (MAPLE Business Council, 2024). That figure caps a five-year period of sustained trade growth, with exports to Canada increasing at an average annual rate of 5.8%.
The top outbound categories are deeply rooted in Colorado’s economic base: meat and livestock, industrial machinery (including agricultural technology), and medical and surgical instruments. These aren’t speculative or luxury sectors, they represent core industries in rural counties, manufacturing hubs, and agricultural zones throughout the state.
Now, those channels are under strain.?
With retaliatory tariffs from Ottawa looming in response to U.S. duties, Colorado’s exporters may see reduced access, higher barriers, and less favorable pricing in Canadian markets. At the same time, rising costs on imported raw materials like steel and aluminum are squeezing margins on domestically produced goods, especially precision equipment and machinery that rely on those inputs.
This dual exposure, rising input costs and declining export revenue, creates a compounding effect on Colorado’s economy. It tightens capital flows, weakens balance sheets, and risks job losses in sectors that often operate on thin margins. When the cost to build goes up and the income from exports goes down, the economic fallout is more than additive, it’s exponential.
For Colorado policymakers and industry leaders, this isn’t just a housing issue or a trade issue. It’s a broader question of economic resilience.
Wexit: Western Canada’s Fracture Point, and Why It Matters to Colorado
Many people are asking how long it will take for our trade with Canada to “get back to normal.” That question is not as simple as it seems, and is part of a much broader issue that is plaguing Canada right now. In order to explain, we need to add some context.
Unlike the United States, where each state operates under a constitutional framework that guarantees broad autonomy and legal protection, Canadian provinces exist under a far more centralized federal structure. In the U.S., states hold constitutionally protected rights that make secession nearly impossible without Congressional and legal approval. In contrast, Canadian provinces like Alberta, Saskatchewan, and British Columbia have historically operated with less constitutional independence, making the path to secession murkier, but not entirely out of reach.
The term “Wexit”, short for “Western Exit”, has gained traction over the past five years as a rallying cry for provinces disillusioned with Ottawa’s policies. What began as fringe sentiment has evolved into serious political mobilization. Alberta’s Prosperity Project and other regional advocacy groups have gained momentum, with calls for independence moving from online rhetoric to signature collection for actual referendums (CBC).
Trump’s offhand remark in 2024 about making Canada the “51st state” may have started as a joke, but for many in Western Canada, it tapped into a deeper frustration. These provinces are resource-rich, particularly in oil, gas, and lumber, yet they often feel hamstrung by federal environmental policies, gun control laws, and redistribution frameworks that favor Quebec and Ontario. As Ottawa imposes tighter carbon taxes and expands federal oversight, the resentment is no longer just about policy, it’s about identity (National Post).
It’s important to clarify: Trump didn’t ignite the Wexit conversation, he merely amplified it. Alberta, Saskatchewan, and British Columbia have been voicing grievances for decades. What was once fringe talk around independence is now manifesting in political campaigns, ballot initiatives, and full-scale media coverage. The ground has shifted. Trump simply observed the growing fracture and added fuel to an already smoldering fire.
Surviving as independent entities would be difficult for these provinces. Despite their natural resources, global market access would require complex trade negotiations, currency stabilization, and new diplomatic frameworks. That’s why many analysts believe their future may lie in greater alignment with the United States. These provinces are already more economically integrated with the American Midwest and West than with Eastern Canada (Fraser Institute).
Petitioning for U.S. statehood, or some form of economic annexation, is no longer inconceivable.
Ottawa, sensing the momentum, has responded with forceful policy measures, most notably, the recent ban on an additional 179 firearm models (CBC News). Coupled with sweeping environmental restrictions, these moves are seen by many Western Canadians as Ottawa tightening its grip to prevent potential unrest. It’s a message: secession won’t come easily. But in doing so, Ottawa may be escalating the very tensions it hopes to suppress.
If even one province were to secede, it would fundamentally destabilize Canada’s economic structure. Alberta and Saskatchewan together supply over 60% of Canada’s oil and natural gas output. British Columbia controls critical Pacific trade routes and forestry exports. Their departure wouldn’t just weaken Canada’s economy, it would fracture its international credibility and redefine North American trade.
For Colorado, the implications are immense. These provinces supply the bulk of the imported materials that underpin our housing market. A break from Ottawa might eventually lead to direct trade agreements with U.S. states, tariff exemptions, or even full economic integration. But the path there is chaotic. Colorado policymakers must monitor this situation with vigilance. What sounds like foreign theater today could become our new trade reality tomorrow.
Strategic Exposure: Why Colorado’s Capital Markets and Real Estate Ecosystem Must Evolve Now
While supply chains, trade routes, and export revenue are being visibly reshaped, an equally profound, but more silent, shift is unfolding behind the scenes: the recalibration of capital markets, investor confidence, and long-term development strategy in Colorado’s real estate ecosystem.
Institutional investors, private equity groups, and regional banks are no longer treating Canadian political turmoil or tariff-related cost surges as isolated anomalies. They’re adjusting risk models, raising capital costs, and delaying funding approvals for residential and commercial development alike. And that repricing is happening now, not down the road.
Marcus & Millichap’s Q3 2025 forecast notes a “noticeable contraction in multifamily groundbreakings across Colorado’s Front Range, attributed in part to construction material volatility and geopolitical trade tension.” Analysts also cite uncertainty around pricing models in lumber-heavy builds, such as single-family detached and garden-style multifamily (Marcus & Millichap, 2025). The result? An early but telling contraction in project underwriting and investor appetite.
This is not purely speculative. Developers who once secured loans based on historical build costs are now finding that pro formas are under attack. Lenders are demanding larger contingencies. Appraisers are applying higher risk-adjusted discount rates. And general contractors are being forced to sign escalation clauses that few would have considered even a year ago.
The full cost of this capital recalibration is yet to be tallied, but the early signals point to a chilling effect on future inventory.
Even projects that are technically “greenlit” face elongated lead times. Trade friction with Canada has reduced availability of prefabricated steel components, aluminum window assemblies, and custom millwork, many of which were previously manufactured in Alberta and British Columbia. Replacing those suppliers isn’t as simple as issuing a new purchase order. Alternative vendors in Mexico or the American South often carry longer delivery windows, lower customization capacity, and, in some cases, require renegotiation of fire code and architectural compliance.
On the municipal side, planning departments across Colorado are quietly bracing for delayed housing completions, reduced developer submissions, and stalled infrastructure tie-ins. Permitting volumes in counties like Weld, El Paso, and Adams are down nearly 9% year-over-year as of Q2 2025, according to state permitting dashboards (Colorado Department of Local Affairs, 2025). Some jurisdictions are now revisiting water allocation schedules and capital improvement budgets under the assumption that projected housing starts will not materialize on time.
Meanwhile, local governments face a dual fiscal squeeze: rising construction costs driving up demand for public infrastructure subsidies, especially around roads, water, and schools, while export-linked tax revenues decline due to Canadian trade slowdown. The equation is simple but brutal: higher costs, lower intake.
The long-term consequence may be a two-tiered housing market. On one end, well-capitalized institutional developers will pass costs to end users, renters and buyers, without blinking, further inflating the top of the market. On the other, small-to-midsize builders may exit altogether, unable to stomach the volatility, leaving a widening gap in workforce housing and entry-level supply.
This phenomenon is already visible in Colorado’s mountain communities and rural resort towns. Builders reliant on tight logistics chains from Western Canada have shelved projects until pricing stabilizes. In Grand County, for instance, two workforce housing initiatives, previously approved and partially funded, have now been “temporarily paused” due to a 38% increase in projected framing and foundation costs since May 2025 (Steamboat Pilot & Today, 2025). The economic development director for Routt County noted, “We’re now seeing developers submit withdrawal notices for projects that were a go in Q1. They can’t hit budget, and their lenders are walking.”
On the consumer side, affordability calculations have fundamentally shifted. Colorado buyers who might have stretched to purchase new construction in late 2024 are now recalculating based on higher interest rates and more expensive build-outs. According to Zillow’s Colorado Market Report from July 2025, the average price per square foot for new builds has increased 7.1% since the start of the year (Zillow, 2025). But that number masks the real story: in lumber- and steel-intensive construction zones, such as Northern Colorado or fast-growing suburban belts like Parker and Castle Rock, the jump is closer to 10–12%.
For investors and real estate professionals, the mandate is clear. Risk analysis must evolve beyond interest rate forecasting or demographic modeling. The new calculus includes geopolitical inputs, cross-border trade dependencies, and foreign policy unpredictability. It requires reading not just the Federal Reserve’s signals, but Ottawa’s actions, and interpreting how a secession movement in Saskatchewan might impact build costs in Aurora.
Even institutional landlords, REITs and pension-backed syndicates, are beginning to treat Canadian volatility as a long-term operating risk. Blackstone’s recent internal guidance cited “supply chain instability in Western Canada” as one of the top five threats to real estate margin compression in 2026 (Blackstone Investor Memo, 2025). When Wall Street starts pricing risk this granularly, Main Street should follow suit.
There’s also an ESG and reputational dimension. Environmental groups are beginning to challenge projects that shift sourcing to countries with lower labor or sustainability standards. A recent suit filed by the Western Slope Sustainability Coalition aims to block a mid-sized developer from sourcing timber from Brazilian vendors in lieu of Canadian FSC-certified lumber, citing deforestation risk (Glenwood Springs Post Independent, 2025). These tensions, once peripheral, are becoming mainstream, and they carry both regulatory and PR risk for unprepared developers.
In the midst of this, the average Colorado consumer is simply trying to make sense of what feels like an economic Rorschach test. Why are kitchen renovations suddenly 40% more expensive? Why is the framing crew delayed for another three weeks? Why did the builder call to say their finish options were being downgraded?
These aren’t just annoyances, they’re symptoms of a structural shift.
Colorado is experiencing, in real time, the downstream effects of a continent-wide realignment in trade, politics, and economic policy. We are on the front lines of a tariff war that, while waged in Ottawa and Washington, is being fought in framing yards, title offices, and household budgets from Fort Collins to Pueblo.
The old playbook, build cheaper, sell faster, repeat, no longer applies.
Finally, this isn’t just a foreign policy event. It’s a litmus test for Colorado’s economic agility, policy readiness, and housing resilience. The outcome will be written not just in GDP reports or export tallies, but in neighborhoods built, or not built, in the next 24 months.
Conclusion: The New North American Reality
What began as a tariff dispute has evolved into something far more consequential: a structural reordering of Colorado’s economic landscape. Our housing market, construction pipelines, and export economy are no longer buffered from foreign politics, they’re entangled in them.
Whether it’s Alberta threatening secession, Ottawa tightening control, or Washington doubling down on protectionist policy, the message is clear: the rules of engagement have changed.
For real estate professionals, builders, and policymakers in Colorado, the priority now is strategic adaptation. That means diversifying sourcing channels. Hedging export exposure. Building regional alliances. And perhaps most importantly, educating clients, investors, and community leaders on what’s coming.
This isn’t the time for paralysis. It’s time for planning.
Buyers need help navigating cost volatility. Developers need help forecasting risks. Homeowners considering renovations or rebuilds need guidance on timelines, budgets, and value. And local governments need a clearer understanding of how to align infrastructure, permitting, and housing policy to the new economic realities.
In the months ahead, the pressure will continue to rise. But so too will the opportunity, for those who can see past the headlines and position themselves accordingly.
Colorado’s future will not be determined in Ottawa, Washington, or Wall Street.
It will be decided here, on the ground, by the people building homes, advising clients, and keeping our local economy resilient.
And if we get it right, we won’t just weather this moment, we’ll lead through it.
If your current advisor isn’t watching these shifts closely, it may be time for a second opinion. The next move in your real estate journey should begin with strategy, not guesswork.
For investors and homeowners looking to adapt their portfolios to today’s shifting market, strategic guidance is essential. Our expert brokers at Keller Williams Preferred Realty, LLC offers in-depth planning aligned with today’s economic realities.
Legal Disclaimer:
This article is intended solely for informational and educational purposes and is based on data available as of August 2025. While every effort has been made to ensure the accuracy and timeliness of the information presented, no guarantee is made as to its completeness or reliability. Readers are strongly advised to independently verify any facts, figures, or statements contained herein before relying on them to make business, financial, legal, or real estate decisions.
Nothing in this publication should be construed as legal, tax, or investment advice. The author is not a licensed attorney, tax professional, or financial advisor. Any discussion of legal or regulatory matters is provided as general commentary and must not be interpreted as a substitute for formal legal counsel or professional tax guidance. Readers should consult qualified professionals before acting on any information presented.
The views and opinions expressed in this article are those of the author alone and do not necessarily reflect the official policy or position of the publisher, any affiliated companies, or any regulatory body. Neither the author nor the publisher accepts any liability for losses or damages arising from the use of this content.
Author: Kato J. S. Mitchell – Operating Principal; Red Zebra Holdings, Westminster Asset Holdings, Operating Principal; Keller Williams Preferred Realty, LLC, & Lead Broker; The Mitchell Team @ Keller Williams Preferred Realty, LLC
Kato J. S. Mitchell is a Denver-based real estate economist, brokerage owner, and investor with over 25 years of experience navigating Colorado’s residential and commercial property markets. A recognized Denver real estate expert, Mitchell transformed his top-producing sales team into a full-scale real estate empire.
He is the Operating Principal of Keller Williams Preferred Realty, LLC, the largest real estate office north of I-70 in Colorado, and holds a majority stake in The Preferred Insurance Network (PIN), a company designed to help clients save thousands annually in property and casualty insurance premiums.
Mitchell’s real estate firm, Keller Williams Preferred Realty, LLC remains a powerhouse in the Denver Metro market. While his firm has divisions in Residential, Luxury, Commercial, Investment, Property Management, and SSR – specializing in complex transactions including divorce, foreclosure, REO, probate/estate sales. While still practicing real estate, today, Kato dedicates much of his time to coaching agents to become trusted real estate advisors, helping clients build generational wealth through real estate.
“Our first goal is to help our clients cross the $10 million net worth threshold as quickly and responsibly as possible,” Mitchell says.
A multi-year appointee to the Colorado Real Estate Commission’s Forms Committee, Mitchell helps draft the contracts used by every licensed Realtor in the state. He was named to the Denver Business Journal’s “40 Under 40” in 2006 and is a ten-time recipient of 5280 Magazine’s Five Star Real Estate Award for Outstanding Customer Service, an honor earned by fewer than five teams in Colorado.
In addition to his work as an Entrepreneur, Real Estate Investor, Real Estate Market Columnist, Instructor of Economics, Educator and Speaker for Investment and Realtor Groups and Real Estate Market Strategist, Kato is a devoted husband and proud father of three.
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