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Steel. Lumber. China. Mexico. Europe. Reciprocal.
These are just some of the goods, countries and methods slated for tariffs by President Donald Trump since he assumed office in January. Each proposal has its own degree of percentage and timeline, all of which can change without warning from a president who seems to thrive on uncertainty.
Homebuilders, however, crave certainty in an increasingly chaotic economy, and they hope to get it on Tuesday, when Trump said that multiple proposed tariffs will take effect.
“There isn’t enough certainty,” Jim Tobin, the president and CEO of the National Association of Home Builders (NAHB), previously told HousingWire. “Are we going to be back in the same cycle a month from now? We’re in a pause rather than either going forward with tariffs or doing away with them.”
Trump paused 25% tariffs on Canada and Mexico in exchange for concessions related to immigration enforcement and drug trafficking. The pause was originally scheduled to expire Saturday, but Trump recently announced it would instead happen on Tuesday, March 4.
He also said that a 10% tariff on China will take effect on Tuesday, which is in addition to a 10% duty he implemented earlier in February.
These costs directly impact homebuilders because China, Mexico and Canada are key trade partners for building materials.
According to data from John Burns Research & Consulting (JBREC), the U.S. imports 73% of small appliances, and 67% of these imports come from China. Likewise, 73% of sawmill wood imports come from Canada. Mexico makes up a sizable share of hardware, major appliances and glass imports.
But whether these tariffs take effect or not is only the closest hurdle for homebuilders to clear, as Trump has either scheduled or floated tariffs on individual building materials. On March 12, a 25% duty on steel and aluminum is set to take effect, and he’s proposed but not scheduled a 25% tariff on lumber imports.
Trump recently threatened a 25% tariff on Europe, and he’s repeatedly espoused the merits of “reciprocal” tariffs in which the U.S. would match all tariffs placed on it by other countries. If enacted, it could reset the entire price structure of the U.S. economy.
The effect of the tariff minefield is beginning to take a toll on homebuilders. The NAHB/Wells Fargo Housing Market Index (HMI) in February fell five points compared to January, with potential tariffs being a primary driver for the decline in builder confidence.
“Uncertainty over the scale and scope of tariffs has builders further concerned about costs,” NAHB chief economist Robert Dietz said in a statement about the HMI.
“Reflecting this outlook, builder responses collected prior to a pause for the proposed tariffs on goods from Canada and Mexico yielded a lower HMI reading of 38, while those collected after the announced one-month pause produced a score of 44. Addressing the elevated pace of shelter inflation requires bending the housing cost curve to enable adding more attainable housing.”
Homebuilders have made pleas to the Trump administration for relief. Before the pause on Canadian and Mexican tariffs, the NAHB requested an exemption for building materials, saying that increasing the cost to build a home would work against Trump’s Inauguration Day memo that calls for emergency home-price relief.
A report from JBREC last week warned that the proposed tariffs would not only increase the cost of building materials, but they could also raise borrowing costs. Housing demand would likely drop due to higher prices, and supply chains could be disrupted, which take time and money to establish.
Homebuilders did get some encouragement this week as Scott Turner, the new secretary of the Department of Housing and Urban Development (HUD), said at an NAHB conference that he plans to remove regulations that drive up the cost of housing.
He did not specify which ones, and his options are limited as the majority of housing regulations — such as zoning — are implemented at the local level.
“A home is more than four walls,” Turner said. “It’s the foundation of a thriving community. To decrease the cost and increase the supply of affordable housing, we will terminate these unnecessary, ineffective and costly regulations.”
The ultimate results of Trump’s approach to tariffs remains to be seen, but for now, homebuilders have Tuesday circled on their calendars.
