Builders Warn Trade War Is Now Hitting Housing

September 19, 2018

The Trump administration imposed more tariffs—$200 billion worth—on Chinese goods this week, and homebuilders say this latest round of tariffs could greatly affect the costs of housing construction.

The levies will go into go into effect Sept. 24. The tariffs will start at 10 percent and then increase to 25 percent on Jan. 1.

The foundation of a home under construction

mouringkolhoff - Morguefile

Randy Noel, chairman of the National Association of Home Builders, says that the tariffs on Chinese imports includes $10 billion of goods used by the residential construction sector. About 6,000 goods involved in the latest tariffs are related to the construction of new apartments and homes, the NAHB says.

This “could have major ramifications for the housing industry,” Noel says. “With housing costs on the rise, this action translates into a tax increase on housing that will rise even more significantly on Jan. 1 when the tariff rate jumps to 25 percent.”

Noel says that the increase is following a current 20 percent tariff on softwood lumber imports from Canada. Noel says the lumber tariffs have already “added thousands of dollars” to the price of the average newly built single-family home.

The Trump administration has been imposing tariffs to pressure China to change its longstanding—and what it feels is unfair--trade practices with the U.S.

A Foreign Ministry spokesman is reportedly in talks to help settle the dispute, The New York Times reports.

The potential tariff impact to the housing industry also comes on the heels of another report that a labor shortage within the building industry is prompting homebuilders to rise their home prices. Economists have been calling for homebuilders to build more housing with tight inventories of homes for sale plaguing many markets. Read more: Labor Shortages Push New Construction Costs Higher