Housing in America is set to become even less affordable as new tariffs imposed by President Donald Trump go into effect this Wednesday, October 1. These tariffs include a staggering 50 percent tax on imported kitchen cabinets and bathroom vanities, a 30 percent levy on upholstered furniture, and a 25 percent tax on heavy trucks used in construction. These new measures will add to existing tariffs on steel, aluminum, and lumber, which have already been fueling rising construction costs throughout the year.
Back in April, the National Association of Home Builders (NAHB) estimated that tariffs were adding approximately $10,900 to the cost of building a typical new home — a figure that has likely escalated with the additional tariffs set to take effect in October. As the tariffs come into play, homebuilders and potential buyers alike are bracing for the compounded impact on housing affordability.
A number of companies have stockpiled materials to create a temporary buffer against these new tariffs, but these reserves are not sustainable. The building industry is now facing a fundamental challenge: each additional $1,000 in construction costs is projected to price out more than 115,000 families from the home-buying market, according to the NAHB.
This comes at a particularly critical time. Housing experts estimate that the country needs at least 3.7 million new homes to alleviate the severe housing shortage that has left more than 770,000 individuals officially counted as homeless last year. With mortgage rates hovering around 6.4 percent and nearly 75 percent of American households unable to afford a median-priced new home, the affordability crisis is affecting everyone — from renters vying for limited apartments to homeowners postponing renovations, and builders grappling with supply chain issues. Now, the newly imposed tariffs are pouring gasoline on these already raging fires.
The reality is that when Trump imposes a 50 percent tariff on kitchen cabinets from abroad, American importers bear the brunt of that tax, not the foreign manufacturers. These importers will subsequently pass the costs onto builders, who will, in turn, pass them on to homebuyers. For instance, a developer planning to install $15,000 worth of imported cabinets in a new home now faces an additional $7,500 in costs. When these costs multiply across various materials like appliances, fixtures, lumber, and steel, the financial burden grows swiftly.
The NAHB reports that approximately 7 percent of all goods used in new residential construction come from foreign countries, translating to around $14 billion worth of imported materials in 2024 alone. While this may seem like a minor percentage, the financial implications are substantial.
The impact of these tariffs varies significantly by region. A study conducted by the real estate firm Evernest found that tariffs could add anywhere from $26,180 to the cost of a new home in Oklahoma, skyrocketing to over $100,000 in Hawaii. In high-cost states like California and Massachusetts, the added costs from tariffs are expected to exceed $60,000 per home.
Despite the mounting evidence of the tariffs’ impact on housing affordability, the Trump administration maintains that it bears no responsibility for the affordability crisis renters and homeowners face as a consequence of its trade policies. White House spokesperson Kush Desai attributed the worsening housing affordability to what he termed Joe Biden’s “open border policies,” claiming that they exacerbate existing market burdens.
However, the reality reveals a different narrative. The tariffs not only inflate material prices, but they also create scarcity and unpredictability in supply chains. Developers, who often plan projects months or even years in advance, are now confronted with volatile material costs that hinder their ability to budget effectively. Recent construction data indicates that single-family housing starts have fallen to a near 2.5-year low, while permit approvals have dropped to levels not seen since April 2023.
Developers are sounding the alarm. Anthony Hrusovsky from Chicago’s Mavrek Development expressed to the Chicago Tribune that tariffs have “killed” negotiations for a significant project due to the uncertainty around costs that were previously predictable.
A survey by Gusto, a firm providing payroll services for small businesses, found that 50 percent of companies believe tariffs have negatively impacted their business this year, with 56 percent expecting similar downturns next year.
The situation is further complicated by the lumber industry, where Canada supplies roughly 85 percent of all U.S. softwood lumber imports. The Trump administration recently doubled its tariff on Canadian lumber from 14.5 percent to a staggering 35 percent. Given that American sawmills currently lack the production capacity to satisfy domestic demand, builders will face higher costs regardless of whether they source lumber from Canada or from a constrained American market.
Moreover, these tariffs are poised to drive up renovation costs as well. The levies on kitchen cabinets and furniture mean that homeowners looking to update their spaces will face steeper bills, potentially discouraging them from undertaking renovations and affecting property values across the board.
For renters, the impact of these forthcoming tariffs will be indirect but equally significant. As the cost to build apartments rises, developers are likely to construct fewer rental units, tightening an already competitive market and driving up costs for tenants. Additionally, potential homebuyers who are priced out of the market due to higher home costs and mortgage rates are likely to remain in the rental market longer, further squeezing demand for available apartments.
The ripple effects extend beyond construction. Tariffs can elevate prices nationwide, contributing to sustained high interest rates and mortgage costs. Already, trade uncertainty is rattling the stock market and stalling economic growth.
Trump’s tariff-driven cost increases are glaringly at odds with the administration’s stated housing goals. While pledging to make housing “affordable again,” Trump has signed executive orders aimed at reducing regulations that raise housing costs. Yet, the reality is that while deregulation could save on development expenses, the tariffs are adding thousands of dollars per home, undermining any potential gains from regulatory relief.
These contradictions become more pronounced when considering the administration’s immigration enforcement policies. Over one-third of construction workers in the U.S. are foreign-born, and the administration’s immigration raids have already begun to disrupt construction sites, with many foreign-born workers opting not to show up out of fear. According to a July analysis from the Economic Policy Institute, construction jobs could see significant declines as a result of the deportation agenda, further impacting an industry already stretched thin.
For a nation grappling with a profound housing crisis, Trump’s trade war is exacerbating the problem, one tariff at a time.
