A can of soda and a six-pack of beer may become more expensive thanks to the Trump administration’s proposed tariffs on steel and aluminum imports. And housing could cost more too.
Trump announced on Thursday that he plans to impose a 25% tariff on steel imports and a 10% tariff on aluminum, in a bid to boost domestic production and add new jobs. Home builders immediately slammed the plan. “This announcement by the president could not have come at a worse time,” Randy Noel, chairman of the National Association of Home Builders (NAHB) and a home builder and real-estate developer from LaPlace, La., said in a statement.
“Tariffs hurt consumers and harm housing affordability,” he said.
The tariffs on steel and aluminum likely will have an impact on new home prices if the cost of those materials increases in the U.S. But that effect will likely be more muted because new homes typically have more wood than metal, said Aaron Terrazas, senior economist at real-estate website Zillow. Whereas buying lumber represents one-third of the cost of building a new home, steel and aluminum contribute to between 0.5% and 1% of a home’s cost.
New apartment buildings and condos will be hardest hit
There are exceptions to that rule, however. Unlike with single-family homes, however, apartment and condo buildings require a significantly more steel and aluminum in their construction than they do lumber. “You’ll see more price pressure in the multifamily space,” Terrazas said. And those costs may get passed onto both buyers and renters.
And home-building activity had begun to pick up in recent months. Therefore, there’s less potential for an inventory slowdown. “The supply situation isn’t quite as dire,” Terrazas said. “The concern is more the supply at the right price point, and adding to construction costs will only make it harder to build at an affordable price point.”