Experts: Mexican Tariffs Would Hurt Housing Affordability

June 3, 2019

Housing analysts warn that President Donald Trump's proposal to impose a 5% tariff on Mexican imports could have a trickle-down effect on the U.S. real estate market, pushing up prices for homes and many household goods. Newly constructed single-family and multifamily units may become more expensive because the tariff would hike the price of homebuilding materials, CNBC reports.

Eleven percent of steel imports to the U.S. come from Mexico, according to international trade administration data. Steel is largely used in commercial and residential construction, as well as home renovations. Additionally, the tariff will raise the cost of cement—and Mexico is the fifth-largest supplier of cement to the U.S., CNBC reports.

Trump says the tariff on Mexican goods will be instated unless Mexico takes steps to curtail illegal immigrants from entering the U.S. The president has proposed that the tariff start at 5% on June 10 and “gradually increase” by 5% each month until October.

“Any increase in cost will hit builders and jack up home prices to home buyers,” CNBC reports. The U.S. imported $346.5 billion worth of goods from Mexico in 2018. Economists with the University of Michigan say that so far, American consumer sentiment has been buoyant amid another trade war with China as well as negotiations with other regions like Europe and Japan.