HousingWireHousingWire
Canada has been invited to the tariff pause party.
President Donald Trump signed an agreement Thursday for a one-month pause to 25% tariffs on Canadian goods covered by the United States-Mexico-Canada Agreement (USMCA). This includes the majority of materials used in home construction, including lumber.
The news comes mere hours after Trump announced on social media the same pause for Mexico, where homebuilders source appliances, hardware and glass. The goods are also covered by the USMCA, which is the replacement for the North American Free Trade Agreement (NAFTA) that Trump implemented in July 2020.
The Canadian and Mexican tariffs are scheduled to resume on April 2, the same day the president said that “reciprocal” tariffs will take effect. A 25% duty on steel and aluminum imports is scheduled for March 12.
Thursday’s news are the latest twists in the on-again, off-again tariff saga that’s roiled homebuilders, financial markets and the broader global economy.
After pausing the 25% tariffs on all Mexican and Canadian goods at the beginning of February, Trump allowed them to take effect on Tuesday before allowing for the USMCA carve-out on Thursday. On Wednesday, he allowed for a month-long exemption on automobiles after pushback from U.S. car companies.
It’s welcome news for homebuilders. The National Association of Home Builders (NAHB) formally asked the Trump administration for a tariff exemption on building materials. It claims that tariffs contradict the day-one executive order Trump signed calling for emergency home-price relief. An exemption has not been directly granted.
According to data from John Burns Research & Consulting (JBREC), more than 30% of lumber imports come from Canada. Mexico provides 33% of major appliance, 23% of glass and 20% of hardware imports. NAHB said that more than 70% of gypsum is sourced from Mexico.
The bad news for builders is that Trump allowed the originally proposed 10% tariff on Chinese goods to take effect, and he added another 10 percentage points to that on Tuesday. Major imports from China include small appliances (67%) plumbing fixtures (55%), glass (33%), major appliances (30%) and hardware (29%).
The prospect of tariffs is dampening the mood among homebuilders. In the February NAHB/Wells Fargo Housing Market Index (HMI), sentiment among builders fell by five points compared to January.
It’s hard to tell what Trump is trying to achieve with tariff threats. Rather than trade policy, he continues to speak about potential deals with Canada and Mexico in terms of border security and drug trafficking. The February pauses came in exchange for minor concessions on these two issues.
Politico reported Wednesday that a source close to the administration called the tariff drama “the greatest show on earth,” advising that people “stay tuned, because you never know what tomorrow’s gonna bring.”
That mindset won’t be helpful for homebuilders, who more than anything want certainty in trade policy so they can operate their businesses in a consistent manner.
