President Trump caught many by surprise last week by announcing planned tariffs on steel and aluminum, jostling the markets and prompting analysts to weigh in on the prospects of a trade war. But how would the proposed tariffs affect the housing industry?
The National Association of Homebuilders announced their opposition to the proposed tariffs on Thursday of last week, warning that the increased steel costs would, in turn, raise construction costs, which would then further drive up already inflated home prices. The planned tariffs could add 25 percent to steel prices and 10 percent for aluminum from foreign suppliers. This would come atop tariffs the President imposed on Canadian lumber companies in April 2017, which also affected the home construction industry here in the States. According to Bloomberg data, lumber prices have increased by 31 percent since those tariffs were imposed.
Commerce Secretary Wilbur Ross has publically downplayed the potential negative impact on American industries. Ross appeared on CNBC last week, where he used a can of Campbell Soup as an example of a product that would theoretically see a price increase of less than a cent, asking, “Who in the world is going to be bothered” by that small change.
Announcing that no countries would be immune from the import tariffs, White House trade adviser Peter Navarro called President Trump’s decision to impose the tariffs a “courageous and tough decision.”
Others have voiced concerns, however, including representatives of the housing industry. Randy Noel, Chairman of the NAHB, said in a statement that “Given that home builders are already grappling with 20 percent tariffs on Canadian softwood lumber and that the price of lumber and other key building materials are near record highs, this announcement by the president could not have come at a worse time.”
Lawrence Yun, Chief Economist of the National Association of Realtors, said in a statement, “Tariffs could measurably raise the cost of building materials and hinder home construction of affordable homes.”
Rick Schumacher, Editor and Publisher of the LBM Journal, which covers the lumber and building materials industry, told Realtor.com, “It hurts homebuyers. It creates uncertainty ... and any uncertainty is bad."
According to a survey of economists by the University of Chicago Booth School of Business, 93 percent of those surveyed either "Disagreed" or "Strongly Disagreed" with the statement, “Adding new or higher import duties on products such as air conditioners, cars, and cookies—to encourage producers to make them in the U.S.—would be a good idea.”