Single-family homes under construction in the rural hills of San Marcos, Calif. White House policies are making it considerably more expensive to build and maintain a home in the United States.Mike Blake/Reuters
President Donald Trump wants to lower U.S. home prices. His trade policies are continually making that harder to achieve.
During his second term, Mr. Trump has imposed tariffs on a slew of materials and products used in the construction, renovation and furnishing of homes. Just this week, he proposed 50-per-cent duties on US$20-billion worth of Canadian products, including plywood, doors and cement, set to take effect on Aug. 19.
Combined with existing tariffs on Canadian softwood lumber and those targeting furniture manufacturers, the White House is making it considerably more expensive to build – and maintain – a home, at a time of already waning affordability.
And it goes beyond trade policy: The recent flare-up of violence in the U.S.-Iran war is putting pressure on the bond market, adding to borrowing costs for American homebuyers.
“America has a problem: We have a shortage of housing,” said Anirban Basu, chief economist at the Associated Builders and Contractors, a national U.S. trade association. “But we’re doing so many things to drive up the cost of housing,” he added, including “these tariffs that impact a variety of construction inputs.”
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Mr. Trump has repeatedly said that the U.S. doesn’t need Canadian products. “We don’t need their lumber, because we have our own forests,” he told the World Economic Forum last year.
But lumber is a multibillion-dollar export industry – if something of a lengthy irritant between the two countries. In 2024, 75 per cent of softwood lumber imports in the U.S. came from Canada, an RBC report said. And softwood lumber comprises roughly 8 per cent of a new home’s construction value in the U.S., Mr. Basu estimates.
“Americans use a lot of wood in their residential construction,” he said.
That wood is now much more expensive. The U.S. has imposed duties of more than 45 per cent on most Canadian softwood producers. As a result of higher Canadian lumber prices, Americans have been relying more on German and Brazilian products that are more expensive than tariff-free Canadian wood, Mr. Basu said. With fewer domestic competitors, he added, less-efficient U.S. producers are able to raise their prices, too.
In general, Mr. Basu said U.S. tariffs have driven up the cost of lumber in the country by about 30 per cent.
The duties also extend to home furnishings. Last fall, the White House imposed Section 232 tariffs – also known as sectoral tariffs – on upholstered furniture, kitchen cabinets and vanities, with a 25-per-cent duty rate. Section 232 tariffs also make up almost a quarter of the total duties on softwood.
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Mr. Trump’s erratic trade policies are often aimed at extracting concessions from trade partners, drawing investment capital to the U.S. and bolstering his country’s manufacturing base. Some industry groups, such as the American Kitchen Cabinet Alliance, have pushed for tariffs to prop up domestic production.
The flip side is that Canadian furniture companies – many of them small and mid-sized firms – are losing U.S. sales, forcing them to look elsewhere for customers, pare back operations and consider a stateside move to stay in business.
Ultimately, these trade policies are heaping financial pressure on a U.S. home market that’s characterized by weak resale activity and rising prices. Thirty-year fixed rate mortgages – a popular home loan option in the U.S. – are running at about 6.6 per cent, lower than in recent years, but much higher than early in the pandemic and the years preceding it.
Around two-thirds of American households are unable to afford a median-priced new home, according to a February report from the National Association of Home Builders. Separately, Americans are about as pessimistic about the economy as they’ve ever been, according to a University of Michigan survey that’s been conducted for several decades.
“We used to think about the duties and tariffs in the lumber aisle of Home Depot, but now if you go into a Home Depot store, the 338 tariffs would impact much more of the store,” said Kim Haakstad, chief executive officer of the BC Council of Forest Industries, referring to Section 338 tariffs on Canada that were announced earlier in the week.
“Our customers in the United States are paying more, and then average Americans are paying more,” she said.
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Mike Erdmann, chief executive officer at the Home Builders Association of Marion and Polk Counties, located in Salem, Ore., said recent “wild swings in material prices” have created uncertainty among builders and held back construction.
Mr. Erdmann’s association represents about 600 residential construction companies in an area rich with locally produced softwood lumber. He said would-be buyers unsure about whether home prices and the broader economy are heading in the right direction contribute to the housing shortage.
“That leads them to often delay what is really the biggest purchase of their lives. And I think that hesitation, it reduces traffic, it slows sales and, really, it makes builders more cautious about starting new homes, and ultimately that worsens the housing supply problem that we’re dealing with,” he said.