If you are developing, acquiring, or refinancing commercial real estate in 2026, you are managing more than interest rates and market demand. You are also managing uncertainty in the cost, availability, and timing of construction inputs and equipment.
Trade measures between Canada and the United States have made cross-border sourcing and project budgeting more difficult to assess. As part of the current environment, effective September 8, 2026, Canada is scheduled to impose counter-tariffs on approximately $27.6 billion of U.S.-origin goods, with 15%, 25%, and 50% rates matching specified U.S. measures. Steel, aluminum, and automobile measures also continue, and a tariff-remission framework is available. Review the official list of products from the United States subject to counter-tariffs effective September 8, 2026 and Canada's tariff responses for current details.
The practical question is not whether you can predict the next policy announcement. You cannot. The better question is whether your capital structure can withstand several reasonable cost and timing scenarios.
The Situation: What the Tariffs Mean for Your Project
A tariff is a government-imposed charge on certain imported goods. The cost may be paid at the border, passed through a supply chain, or reflected in the final price of materials and equipment.
For your project, the relevant issue is not the political language surrounding a tariff. It is the commercial effect on your budget.
Trade measures may affect:
- Structural and fabricated materials
- Mechanical and electrical equipment
- Building systems and specialty components
- Imported fixtures and interior finishes
- Construction machinery and replacement parts
- Delivery routes, procurement decisions, and supplier lead times
The exact impact depends on the origin of the product, its classification, the terms of your purchase contract, and whether a remission, exemption, or other treatment applies.
Do not assume that a product manufactured in Canada is entirely insulated from cross-border pressure. A Canadian supplier may still rely on imported components, energy inputs, equipment, or materials. That does not establish a specific cost increase for your project, but it does justify closer diligence.
Review the current information from the Department of Finance Canada and the Canada Border Services Agency before relying on any tariff statement in your underwriting.
The Financing Problem: Cost Uncertainty Becomes Capital Uncertainty
You may begin with an approved budget, a contractor estimate, and a preliminary financing plan. If procurement costs move or delivery schedules extend, the original structure may no longer be sufficient.
A change in construction costs can affect:
- The equity required to complete the project
- The amount of contingency you need to maintain
- The timing of construction advances
- Interest carry and other soft costs
- Projected cash flow and debt-servicing capacity
- The value of the completed asset
- The feasibility of your refinance or sale
These are general financing considerations. The specific effect on loan sizing, covenants, advance conditions, or capital-provider appetite will depend on the relevant project and capital provider.
The central risk is often not a single tariff. It is the interaction between cost escalation, delay, liquidity, leverage, and exit assumptions.
A project can remain economically sound in the long term and still experience a near-term funding gap. That is why preparation matters before you need additional capital.
What Capital Providers Evaluate
Capital providers will generally want to understand whether your project remains financeable under changed assumptions. Prepare to answer five questions.
1. Are the costs current and supportable?
Your capital provider will typically examine the sources behind your budget, including contractor pricing, supplier quotations, procurement schedules, and allowances.
Separate fixed costs from costs that remain exposed to repricing. Identify materials that have not yet been ordered and equipment that depends on cross-border sourcing.
Do not present a single-point budget if the underlying inputs remain uncertain. Show the base case, a reasonable downside case, and the assumptions that connect the two.
2. Can you fund the liquidity gap?
A project may require more equity or working capital before the completed asset generates revenue. Capital providers will generally examine your liquidity, committed equity, interest reserve, and ability to respond if costs or timing change.
Stress-test more than the construction budget. Consider what happens if the project takes longer to complete, lease-up takes longer than expected, or a refinance occurs under different market conditions.
3. Is the leverage still appropriate?
Your original leverage decision may have been based on a lower cost base or a higher projected value. Revisit the relationship between total project cost, debt, equity, and the value of the completed asset.
Do not rely on a projected valuation to solve a funding gap that has not been properly underwritten. Your structure should remain credible even if the project requires more cash before completion.
4. Does the financing provide enough flexibility?
Review the conditions attached to your financing. Consider advance mechanics, cost-to-complete requirements, reporting obligations, reserves, guarantees, and the treatment of budget changes.
The right structure is not always the one with the lowest headline cost. It is the one that matches your project’s risk, timeline, and capital requirements.
5. Is the exit still realistic?
Your exit may be a permanent mortgage, a sale, a recapitalisation, or a refinance. Re-test the assumptions supporting that exit.
Ask whether the completed asset will still support the intended financing. Consider updated rents, operating costs, valuation, absorption, and marketability. These are planning considerations; confirm the assumptions for your transaction with the relevant financing sources.
This is the Costs → Liquidity → Leverage → Flexibility → Exit framework. Use it to examine the entire capital architecture rather than treating the tariff question as an isolated line item.
The Common Mistake: Treating the Original Budget as a Fact
Many borrowers focus on whether a lender will approve the initial request. The more important issue is whether the structure can survive the project’s full execution cycle.
Your first budget may have been prepared before a supplier repriced an item, before delivery assumptions changed, or before a contractor updated its allowances. If you continue to treat that budget as fixed, you may understate the equity and liquidity required.
Take a moment to consider what your financing package would look like if:
- A key input cost increased
- An equipment delivery was delayed
- A supplier required a different payment schedule
- Construction interest accumulated for longer
- Your exit financing required updated assumptions
Do not feel discouraged if the answer reveals a gap. Finding the issue early gives you more options than discovering it after construction has started.
Strategic Options to Evaluate
Your strategy should be based on the project, not on a general belief that one type of capital is always better.
Revisit conventional construction or commercial financing
A bank, credit union, or institutional capital provider may be one route to evaluate where a project has strong documentation, supportable costs, sufficient equity, and a clear repayment path.
Start with a complete package rather than waiting for the capital provider to identify the risks for you.
Evaluate CMHC-insured financing where the project fits
For eligible multi-unit rental and related residential structures, CMHC’s MLI Select program may be a strategic consideration. CMHC provides mortgage loan insurance through approved lenders; it is not the direct lender in the ordinary borrower relationship.
CMHC-insured financing may be relevant when the project’s operating model and design align with the applicable program requirements. It is not a universal solution for pure commercial or industrial real estate.
Evaluate Canadian private capital when timing or complexity requires it
Canadian private lenders and private capital providers may be one route to evaluate when a project has unusual timing, transitional risk, construction complexity, or a capital requirement that does not fit a conventional process.
Private capital should not be viewed as a shortcut around underwriting. It should be assessed as part of a deliberate capital plan, with a clear repayment or refinancing strategy.
AK Hunt Capital Finance Ltd. operates as an advisory and structuring firm. We do not present ourselves as a bank or direct lender. Our role is to help you assess available financing routes and organise the information required to pursue an appropriate structure. Explore our commercial real estate financing advisory information.
Your Preparation Checklist
Before you approach capital providers, prepare the following:
- Update your cost plan. Separate committed, quoted, estimated, and exposed costs.
- Map your sourcing. Identify cross-border materials, equipment, components, and suppliers.
- Document assumptions. Record pricing validity periods, escalation clauses, deposits, and delivery expectations.
- Build scenario cases. Prepare a base case and downside cases for costs, timing, liquidity, and exit.
- Re-test your equity. Confirm how much additional capital you could contribute if required.
- Review your leverage. Examine the structure against updated total costs and value assumptions.
- Protect flexibility. Understand advance conditions, reserves, guarantees, reporting, and amendment requirements.
- Confirm the exit. Revisit the refinance, sale, or permanent financing assumptions.
- Verify current rules. Confirm tariff treatment and program requirements with official sources and relevant professionals.
- Seek advice early. A structured review is more useful before a funding gap becomes urgent.
The Next Step: Build a More Resilient Capital Structure
Trade uncertainty does not eliminate viable real estate opportunities. It does require a higher standard of preparation.
Focus on what you can control: the quality of your cost data, the depth of your liquidity plan, the discipline of your leverage, the flexibility of your financing, and the credibility of your exit.
If you would like to discuss your project, acquisition, construction plan, or refinance, contact AK Hunt Capital Finance Ltd. for a confidential Capital Strategy Call. You can also reach us at +1 (204) 259-2407 or admin@akcapitalfinance.com. A conversation can help you take the next step with greater clarity, even while the broader trade environment continues to change.