The U.S. construction industry relies heavily on imported goods, using a reported $13 billion worth of imported materials (approximately 7% of all materials used). These imports vary widely by product type, with items such as computers and electronic components having import shares as high as 68.7%, according to the National Association of Home Builders’ Eye On Housing blog. China accounts for 27% of these imports, followed by Mexico at 11%, and Canada at 8%.
Tariffs act as a tax on importers, increasing costs for businesses. President-elect Donald Trump has proposed tariffs ranging from 10% to 20% on imported goods, with a steep 60% tariff on Chinese imports, leaving many wondering how the residential construction industry will be affected. For instance, a $100 purchase of materials from China would incur an additional $60 tariff, raising the total cost to $160. These added expenses are paid by the importer, which could potentially cause a reduction in profit margins for builders or increase prices for consumers.
Without additional detail for these tariff proposals, it is difficult to estimate the impact of these tariffs. Using our best estimate, a 10% tariff on all imports with a 60% tariff on imports directly from China would result in a $3.2 billion increase in the cost of imported building materials used in residential construction. By product, the largest increase in cost would be for household appliances, where 54% of imports come from China, this tariff adds $670 million for these imported products. Additionally, a 20% tariff coupled with 60% imports from China would result in $4.2 billion in added cost of imported residential building products. Read more
