From Politico:
Where Trump’s tariffs will really hit home
When President Donald Trump unveils his broad slate of new tariffs Wednesday, one industry that typically gets a sympathetic ear from the former real estate magnate is likely to feel especially vulnerable — homebuilding.
Tariffs on imported goods will slam the housing sector – which represents about 16 percent of GDP – just as it’s starting to show signs of life after years of stymied sales due to soaring home prices and high mortgage rates. But the market’s comeback is fragile, and the typically busy spring selling season has been a disappointment so far. The last thing it needs is a price hike on the materials used in new home construction and remodeling.
“Our conversation with the White House has been consistent from Day One – that tariffs will increase the cost of housing because of the building materials we import from Canada, Mexico and China,” said Jim Tobin, president and CEO of the National Association of Home Builders.
Trump was elected in part because of Americans’ frustration with inflation. And housing costs are the biggest single factor in inflation, making up fully one-third of the Consumer Price Index. Trump released an executive order on the first day of his presidency to tackle the rising cost of living, singling out housing as a big target. Now, Tobin said, the president is undercutting his own plans.
“Canada, Mexico and China are our biggest building material trading partners,” he said. “He has pledged to build more housing, and we believe the tariffs work against that goal.”
The rumored 25 percent tariffs on all Mexican and Canadian goods would hit the construction industry particularly hard. Of the 30 percent of lumber that is imported, 70 percent comes from Canada. It’s already tariffed at 14.5 percent, and lumber prices in March were nearly 16 percent higher than they were a year earlier.
Mexico, meanwhile, is the main source of a material used in drywall, with 74 percent of the imported gypsum and lime in 2024 originating there. And ceiling fixtures and electronics often come from China.
“There isn’t a room in a newly constructed home that will not be affected by these tariffs,” Tobin said, noting that manufacturers have already increased their costs in anticipation.
The additional levies could drive up the cost of a new home by about $9,200, according to builders NAHB surveyed. A private survey conducted by Zelman & Associates in February found that builders expected home prices to increase by between 4 and 6 percent – a jump that works out to between $16,700 and $25,000 for a $419,000 home (the median home price in the fourth quarter of 2024).