Housing in America is about to get more expensive, thanks to new tariffs imposed by President Donald Trump that will take effect this Wednesday, October 1.
The new tariffs include a 50 percent tax on imported kitchen cabinets and bathroom vanities, 30 percent on upholstered furniture, and 25 percent on heavy trucks used in construction. These will join existing tariffs on steel, aluminum, and lumber, which have been driving up construction costs this year. Back in April, the National Association of Home Builders (NAHB) estimated that tariffs were adding about $10,900 to the cost of building a typical new home — and that was before the steep August tariffs took effect. No doubt the October ones will only escalate the problem.
Some companies stockpiled materials before the tariffs kicked in, creating a temporary buffer. But those inventories won’t last forever, and the building industry faces a fundamental challenge: Each additional $1,000 in home construction costs prices out more than 115,000 potential home-buying families, according to NAHB.
This all comes at the worst possible time. Housing experts estimate the country needs at least 3.7 million homes to bring down costs and ease the severe housing shortage. More than 770,000 people were officially counted as homeless last year, mortgage rates hover around 6.4 percent, and nearly 75 percent of American households can’t afford a median-priced new home. The affordability crisis touches everyone—from renters competing for scarce apartments to homeowners delaying renovations to builders struggling with supply chain chaos. Now, tariffs are pouring fuel on these already raging fires.
How tariffs hit buyers directly
When Trump slaps a 50 percent tariff on kitchen cabinets from abroad, American importers — not the foreign companies manufacturing the cabinets — pay that tax. They then pass those costs along to builders, who pass them to homebuyers. If a developer was planning to install $15,000 worth of imported cabinets in a new home, they’re now looking at an extra $7,500 in costs. Multiply that across appliances, fixtures, lumber, and steel, and the numbers add up fast.
In total, about 7 percent of all goods used in new residential construction come from foreign countries, according to NAHB. That might sound small, but it represents $14 billion worth of materials in 2024 alone.
The impact varies dramatically by location. A June study by the real estate firm Evernest found that tariffs could add anywhere from $26,180 to the cost of a new home in Oklahoma to over $100,000 in Hawaii. In expensive markets like California and Massachusetts, the additional costs from tariffs are estimated to exceed $60,000 per home.
The Trump administration, for its part, maintains it holds no blame for whatever affordability crisis renters and homeowners might experience as a result of their trade decisions.
“America’s housing affordability was dramatically worsened by Joe Biden’s open border policies that let tens of millions of illegal migrants walk into the country and overburden housing markets that were already grappling with cumbersome regulatory hurdles,” White House spokesperson Kush Desai told Vox. “The Trump administration is taking a multi-pronged approach to address housing affordability concerns: from mass deportations to deregulation to deflationary policies that are paving the way for further interest rate cuts.”
Beyond sticker shock: Supply chain chaos
The tariffs aren’t just making materials more expensive — they’re making them scarcer and harder to predict. This uncertainty is in some ways more challenging for developers than the costs themselves. Developers planning projects months or years in advance suddenly confront moving targets for material prices, and this unpredictability is already showing up in construction data. Single-family housing starts fell to a near 2.5-year low in August, while permits — a leading indicator of future construction — dropped to levels not seen since April 2023.
Developers have been sounding the alarm. Anthony Hrusovsky of Chicago’s Mavrek Development told the Chicago Tribune recently that tariffs “killed” negotiations with a major equity investor for a planned 25-story, 400-unit project. The tariffs introduced “a level of uncertainty around cost, which had previously been riskless in our eyes.”
Gusto, a payroll services firm for small businesses, conducted an annual survey in August and September and found that 50 percent of companies thought tariffs had hurt their business this year, and 56 percent expected them to do so next year.
Perhaps no material illustrates the tariff trap better than lumber. Canada supplies roughly 85 percent of all US softwood lumber imports and represents nearly a quarter of America’s total lumber supply. Last month, the Trump administration more than doubled its 14.5 percent tariff on Canadian lumber to a rate of 35 percent.
The fact is that American sawmills simply don’t produce enough lumber to meet domestic demand, and it takes time to ramp up production. So homebuilders will face higher costs whether they buy Canadian lumber with tariffs or American lumber from a market with limited supply. And those costs will trickle down to everyone else.
Tariffs don’t just hit new construction — they’re expected to drive up renovation costs too. The levies on kitchen cabinets and on furniture mean that updating one’s home could get much more expensive. In effect, homeowners may become much less willing to invest in home improvements, potentially affecting property values and slowing the broader house renovation industry.
For now, the NAHB is staying relatively quiet. In a statement released on Friday, the homebuilder trade group said they are working to get more details from the administration.
For renters, the pain from the forthcoming tariffs will be more indirect but no less real. When it becomes more expensive to build apartments, developers build fewer of them. That tightens an already competitive rental market and makes things more costly for tenants. Some would-be homebuyers, priced out by higher home costs and mortgage rates, also remain in the rental market longer, further increasing demand for apartments.
Then there are the ripple effects beyond construction. Tariffs can drive up prices economy-wide, keeping interest rates — and mortgage costs — elevated. Trade uncertainty has already rattled the stock market and slowed economic growth in 2025.
Trump’s affordability promise meets reality
These tariff-driven cost increases are particularly maddening because they directly contradict the administration’s stated housing goals. Trump has repeatedly pledged to make housing “affordable again” and has signed executive orders directing agencies to reduce regulations that drive up housing costs.
But while deregulation might save money on development costs, tariffs are adding thousands of dollars per home. Even if the administration could eliminate 25 percent of regulatory costs — an optimistic scenario — that still might not fully offset the price increases from import taxes. Earlier this month, the Budget Lab at Yale estimated that if current tariff levels remain steady, construction output could go down by 3.8 percent in the long run. And tariff levels are not remaining steady — they’re about to increase.
Another irony is that Trump has publicly pressured the Federal Reserve to lower interest rates, which would make mortgages cheaper, but his tariff policies make rate cuts less likely by fueling the inflation the Fed is trying to control.
All of these contradictions become even starker when combined with the administration’s immigration enforcement policies. More than one-third of construction workers are foreign-born, according to 2023 Census data, and in some states — like California and Texas — the share is much higher. The Trump administration’s immigration raids have already started to affect construction sites, and reports reveal that other foreign-born workers have stopped showing up to work out of fear. A July analysis from the left-leaning Economic Policy Institute estimated that construction jobs are likely to be hardest hit from the president’s deportation agenda; the think tank estimated that the industry could shrink by over 18 percent.
A 2024 study examining the Secure Communities immigration enforcement program (which was implemented between 2008 and 2013 and removed roughly 400,000 people from the US) found that the average county lost about a year’s worth of residential construction over four years following enforcement. New homes became 18 percent more expensive within three years, and overall home prices increased 10 percent.
The researchers found that native-born workers didn’t replace deported immigrant workers — in fact, US-born construction jobs also declined. “You need the relatively lower-skilled folks to come in and frame the house before you need the relatively higher-skilled workers to come in and finish the house,” Troup Howard, the lead researcher, told Vox. “And so when you have net losses in those low-skilled occupations, it does lead to a slowdown overall.”
For a country desperate to solve its housing crisis, Trump’s trade war is building a bigger problem, one tariff at a time.
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