Trump Tariffs to Push Up Cost of New Homes
March 6, 2018 — Home builders to pass higher costs on to co-op and condo buyers.
They’re going to drive up the cost of every Ford truck and every can of Budweiser beer. Now there’s another sector of the economy that’s going to be hit hard by President Trump’s recent decision to impose stiff tariffs on imported aluminum and steel: home builders and, by extension, homebuyers.
"These tariffs will translate into higher costs for consumers and U.S. businesses that use these products, including home builders,” National Association of Home Builders chairman Randy Noel tells World Property Journal. "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.”
Noel is not the first to contend that the very people Trump’s tariffs are designed to protect – American workers – are the ones who will suffer from higher prices, especially if the tariffs ignite a global trade war, as many people fear.
"Tariffs hurt consumers and harm housing affordability,” Noel says. “We hope the administration will work quickly to resolve these trade disputes regarding lumber and steel so that businesses and consumers have access to an adequate supply at a fair market price."
Trump's tariffs on imported solar panels, primarily from China, are not likely to hit the domestic economy as hard, since so few Americans work producing solar panels. The added cost to solar projects is expected to be a manageable 3 to 5 percent.
There were 1.33 million home construction starts nationwide in January, up from 1.24 million in January 2017, according to the Department of Commerce. That was attributed in large part to the rise in residential rental and condominium construction. Still, low supply of building materials caused construction prices to rise 6.2 percent from November 2016 to November 2017. The tariffs on steel and aluminum are sure to exacerbate an already bad situation, depressing home starts and pushing up the prices of finished homes. But at least you got a tax break to cover part of the higher cost of a new home.