The housing sector has scored a temporary reprieve from new tariffs—but builders warn that the overall construction cost outlook remains bleak despite the win.
The exemption of Canadian lumber from the Trump administration's latest round of global reciprocal tariffs is being celebrated as a key victory for housing, but the National Association of Home Builders (NAHB) says new tariffs on other building inputs could still drive up prices nationwide.
Why It Matters
While the lumber exemption helps avoid immediate shocks in one essential house building material, NAHB is sounding the alarm about broader consequences of the new tariff policies.
Housing prices are often looked at as a key marker in economic stability.
What To Know
President Donald Trump announced a sweeping 10 percent baseline tariff on nearly all U.S. trading partners last week, with elevated rates as high as roughly 50 percent on some nations.
Canada and Mexico were excluded from the new tariff structure—which was a crucial development, as Canada supplies about 85 percent of U.S. softwood lumber imports.
"NAHB is pleased President Trump recognized the importance of critical construction inputs for housing and chose to continue current exemptions for Canadian and Mexican products, with a specific exemption for lumber from any new tariffs at this time," NAHB Chairman Buddy Hughes said in a statement.
However, the larger housing market could still face bad news.
Currently, new single-family home requires $174,155 in building materials on average, of which $12,713 comes from imported goods, according to the NAHB.
Tariffs, especially those newly applied to goods from Asia and Europe, will likely increase volatility and price expectations, which drive short-term spikes. Over time, restricted supply from tariff-affected regions is expected to result in even higher costs.
Prices for building materials have already climbed 34 percent since December 2020, according to the NAHB, far outpacing overall inflation.
The new tariffs affect not only steel, aluminum, and appliances but also critical construction items like gypsum and concrete. The result is expected to be tighter supply chains and higher expenses for builders, with costs passed directly onto homebuyers.
The impact may be especially severe for products sourced from countries like China, where duties now exceed 50 percent on some categories due to compounded tariffs from previous administrations.
The NAHB previously expressed their concerns over Trump's 25 percent tariffs proposed for Canada and Mexico before the global tariffs were introduced.
NAHB's members understand you have larger and well-intentioned policy goals in mind as you consider a holistic trade policy," Carl Harris, the NAHB chairman of the board, wrote in a January letter to Trump. "However, we respectfully ask that you consider the effects of tariffs on Americans struggling to afford housing and that you exempt critical construction materials from such actions."
What People Are Saying
NAHB CEO Jim Tobin told Realtor.com in November 2024: "Any tariffs that raise the cost of building products are going to flow directly to the consumer, and this will have a detrimental effect on housing affordability."
Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek: "Prices are going to move higher, no question about it. Tariffs on copper and other core materials will push input costs up, and builders aren't eating those costs. They're passing them straight to the buyer. Combine that with high rates, and you've got a recipe for pain."
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: "While lumber being exempt from the most recent tariffs is certainly a win, it's not substantial enough to make up for the many other elevated costs of home production this latest round of tariffs will introduce."
"There are dozens of materials that are not exempt from these tariffs and could add well over $10,000 in cost to the making of new housing units. These costs are going to be passed on to the buyer who is already struggling with one of the most unaffordable markets for housing in modern history."
What Happens Next
Trump's tariff policy is set to go into effect later this month and builders are bracing for near-term disruptions.
NAHB expects the cost of many imported components—including copper wiring, HVAC systems and fixtures—to increase as suppliers adjust to the new duties and increasing costs.
"It gets worse before it gets better, and if jobs start getting cut while prices stay elevated," Thompson said. "That's not just a headwind, that's a tsunami. Think stagflation-rising unemployment, higher prices, and lower GDP."
