Rising material costs, inflation, and scarcity of land are driving up the cost to build a home, and increased tariffs on building materials could exacerbate this problem. On Feb. 1, President Trump announced a 25% tariff on Canadian and Mexican imports, which would significantly raise construction costs. However, as of Feb. 3, these tariffs have been delayed for one month while negotiations between the North American countries continue. Meanwhile, a 10% tariff on Chinese goods has taken effect, with China responding with its own 10% tariff on U.S. goods.
In a recent episode of its Housing Developments podcast, National Association of Home Builders (NAHB) CEO Jim Tobin and COO Paul Lopez discussed these policies, their potential impact on the construction industry, and NAHB's ongoing efforts to work with the administration to find solutions.
“China, Canada, and Mexico—in that order—are our biggest trade partners when it comes to building materials. This is going to have a direct impact not only on the pace and supply of construction but more importantly on the cost of construction. There is not a room in a home that is not affected by these tariffs,” Tobin said during the podcast.
According to recent NAHB data, approximately $184 billion worth of materials were used in residential construction in 2023, with 7% coming from foreign sources. Canada and Mexico are top suppliers, with Canada providing 70% of imported sawmill and wood products, and Mexico supplying 71% of lime and gypsum imports.
Currently, Canadian softwood lumber is already subject to a 14.5% tariff. If the proposed 25% tariff is implemented, total duties on Canadian lumber would approach 40%, further increasing costs and limiting housing affordability. Listen to the full podcast
