President-elect Donald Trump has vowed to impose sweeping new tariffs on imports, leading his critics to argue that the plan will raise prices and spur inflation. …Nearly 10% of building materials used in residential construction are imported, according to the NAHB… and Canada probably accounts for the bulk of those imports. “Any tariffs that raise the cost of building products will have a detrimental effect on housing affordability,” says NAHB CEO Jim Tobin. ….A steep tariff on Canadian lumber would likely hit homebuilders the hardest—and could raise the prices of new homes, at least temporarily. But observers are skeptical that Trump would impose a steep, immediate tariff on such a fundamental raw material imported from a close ally. NAR’s Chief Economist Lawrence Yun said that it’s possible any tariff on lumber could be imposed over a ramp-up period to allow U.S. timber mills to boost production.
The uptick in fuel prices will likely be temporary, said Ken Simonson, chief economist at the Associated General Contractors of America. However, the broader uncertainty tied to potential trade policy changes under the incoming Trump administration presents a new layer of unpredictability for contractors. …Future prices for crude oil and copper, typically reliable predictors of upcoming producer price index shifts, have recently declined. That indicates the potential for a near-term dip in energy input costs, he said. Contractors have largely benefited from input price stabilization in 2024. As of October, contractors expect their profit margins to expand through the first quarter of 2025. …“The next administration’s trade policy increases uncertainty regarding construction material costs,” said Basu. “Beyond the implications of potential tariffs, input prices may rise in the short term if purchasers rush to import materials prior to the implementation of those policies.”