Trump's Trade Plans Could Lead to Higher Home Prices
President Donald Trump's trade plans for Canada, Mexico, and China could lead to higher home prices in the United States, according to industry experts. Even though Trump delayed tariffs on Canada and Mexico, the uncertainty surrounding his policy choices could still inflate building material costs.
The uncertainty surrounding Trump's trade policies could disrupt supply chains and homebuilder timelines, making it difficult for businesses to set prices and plan for the future. This could lead to higher prices for imported building materials, which would push housing costs up and result in a slower rate of construction.
For example, if the 25% tariffs on imports from Canada and Mexico go into effect after the temporary pause, in addition to the tariffs on Chinese imports, they would increase the cost of the average newly constructed home by an estimated $40,000 — about a 10% price hike.
The National Association of Homebuilders, a major trade group, slammed Trump's proposed tariffs on Saturday, saying they would do the "opposite" of the president's promise to lower housing costs and boost the supply of homes.
"Tariffs on lumber and other building materials increase the cost of construction and discourage new development, and consumers end up paying for the tariffs in the form of higher home prices," Carl Harris, chairman of the NAHB, said in a statement.
Basu believes tariffs could have a long-term inflationary impact as they could hurt smaller foreign suppliers and weaken industry supply chains.
"All of a sudden, industry capacity is constrained, it's diminished, and that leads to more market power among those who survive in the industry, which leads to higher prices," he said.
5 Comments
Donatello
This is just the beginning of the consequences of Trump's trade war. We haven't seen the worst of it yet, and it's going to get a lot worse before it gets better.
Michelangelo
It's time we put America first and protect our businesses and workers from unfair trade practices. Trump's tariffs are a necessary step to level the playing field and bring back jobs to America.
Leonardo
These tariffs are a wake-up call to other countries that we're not going to tolerate unfair trade practices anymore. It's time they start playing by the rules.
Raphael
These tariffs are going to boost American manufacturing and create new jobs. Companies will be incentivized to produce goods in the US instead of overseas, which will boost our economy.
Donatello
These tariffs are a long-term investment in the future of America. They're going to create jobs, boost our economy, and make America great again.