The National Association of Homebuilders (NAHB) sent a letter to President Trump Friday asking for tariff exemptions on building materials from Canada and Mexico. The letter follows a Trump announcement that the U.S. was levying tariffs of 25% on Canadian and Mexican imports that would go into effect on Saturday, which would hit homebuilders hard.
The letter reads:
“Our country is facing a severe housing shortage and affordability crisis, which you recognized on your first day in office by issuing an executive order that seeks to increase housing supply and affordability. Bringing down the cost of housing will require a coordinated effort to remove obstacles to construction, be they regulatory, labor or supply-chain related. The National Association of Home Builders (NAHB) stands ready to work with you to accomplish these goals. However, we have serious concerns that proposed 25% tariffs on Canada and Mexico will have the opposite effect, by slowing down the domestic residential construction industry.
“An ongoing challenge facing home builders is the cost and availability of building materials. Since January 2021, inputs to residential construction saw price increases of just over 30%. Our sector relies heavily on a diverse and cost-efficient supply chain for building materials such as lumber, steel, gypsum and aluminum. While home building is inherently domestic, builders rely on components produced abroad, with Canada and Mexico representing nearly 25% of building materials imports. Imposing additional tariffs on these imports will lead to higher material costs, which will ultimately be passed on to home buyers in the form of increased housing prices. Further supply chain disruptions from increased tariffs coupled with increased demand for materials could also hinder rebuilding efforts in areas affected by natural disasters, which you have pledged to help rebuild as quickly as possible.
“NAHB’s members understand you have larger and well-intentioned policy goals in mind as you consider a holistic trade policy. However, we respectfully ask that you consider the effects of tariffs on Americans struggling to afford housing and that you exempt critical construction materials from such actions. We look forward to working with you to create jobs, boost our economy, and provide safe and affordable housing for all Americans.”
During Trump’s first term, tariffs on Canadian softwood lumber led to a surge in costs for homebuilders. Back in 2018, the NAHB estimated that the tariffs added nearly $9,000 to the cost of constructing a single-family home. The impact on lumber prices was dramatic, with costs rising close to 80% year over year, in part due to the taxes.
Per the Tax Foundation, the first Trump administration implemented nearly $80 billion in new taxes on Americans by imposing tariffs on thousands of products value at roughly $380 billion in 2018 and 2019 — one of the largest tax hikes in decades.
This time around, the Tax Foundation estimates that the tariffs on China, Mexico and Canada would Increase taxes by $1.2T from 2025 through 20434, reduce GDP by 0.4%, cut 344,000 jobs and increase taxes by about $830 per U.S. household.
