How Tariffs Impact the Home Building Industry

Scarcity and an acute, sustained rise in building material costs — from softwood lumber to distribution transformers — are driving up the cost to construct homes and harming housing affordability. There are several factors driving this trend, notably inflationary pressures and global factors, including trade uncertainty.

NAHB estimates that $204 billion worth of goods were used in the construction of both new multifamily and single-family housing in 2024. $14 billion of those goods were imported from outside the U.S., meaning approximately 7% of all goods used in new residential construction originate from a foreign nation.

Import Tariffs on Building Materials

A tariff is essentially a tax on an imported good, meaning the importer pays an additional cost for importing such an item from another country. This effect raises the price of imported products, where the price increase is then typically absorbed by the importer or passed on to the end consumer of the good, usually in some combination. For most goods, the cost is passed on the end-users, meaning consumers. So tariffs on building materials raise the cost of housing, and consumers end up paying for the tariffs in the form of higher home prices.

For example, if a retailer imports a $500 washing machine from a country subject to a 25% tariff, the retailer will owe $125 in tariffs to the U.S. government. This is what could happen next:

• The retailer could try to get the importing country to pay for some of the tariff cost by telling that country it will pay less for the product.
• The retailer could absorb the cost of the tariff and reduce its profit margin.
• The retailer could raise the price of washing machines in its stores.
• The retailer could do any combination of the above options.

For most goods, the cost is passed on the end-users, meaning consumers. In this case, the consumer would pay an extra $125 for the $500 washing machine. So tariffs on building materials and home appliances raise the cost of housing, and consumers end up paying for the tariffs in the form of higher home prices and goods.

The cost of building materials has already risen by 34% since December 2020, which is far higher than the rate of inflation. Data from the NAHB/Wells Fargo Housing Market Index (HMI) April 2025 survey reveals that builders estimate a typical cost effect from recent tariff actions at $10,900 per home. More than 60% of builders surveyed by NAHB have reported seeing higher costs due to tariffs.

Higher Canadian Lumber Tariffs

Softwood lumber is a key component in home building. Canada accounts for roughly 85% of all U.S. softwood lumber imports and represents almost one-quarter of the supply in the U.S.

In addition to the global tariffs, the Commerce Department annually reviews antidumping and countervailing duties on Canadian lumber. In 2025, Commerce increased these duties from 14.5% to 35%, with an additional 10% Section 232 tariff on all timber and lumber imports — jumping the overall price of Canadian lumber by 45%.

Although this tariff is supposed to protect domestic lumber firms, recent data show that U.S. sawmill production has been essentially flat the past two years despite continued demand. It will take years until domestic lumber production ramps up to meet the needs of our citizens. In the interim, imports of softwood lumber are vital to build, remodel and repair American homes and apartments.

Other Tariffs Affecting Home Building

Additionally, numerous raw materials and components, ranging from steel and aluminum to home appliances, are sourced from nations across the globe that are subject to Trump’s latest tariffs. These tariffs are projected to raise the cost of imported construction materials by billions of dollars, depending on the specific rates. For some materials, where imports are critical to supply, prices could see dramatic increases, adding layered costs that could substantially impact builders’ ability to deliver new projects.

• Kitchen Cabinets, Vanities and Furniture: A 25% tariff on kitchen cabinets, furniture and vanities remains in effect until Jan. 1, 2027.
• Steel and Aluminum: A 50% Section 232 tariff on steel and aluminum imports remains in effect.

Separately, following the Supreme Court’s Feb. 20 verdict invalidating the use of emergency powers under the International Emergency Economic Powers Act (IEEPA) to enact tariffs, President Trump announced a new, global tariff of 10% under Section 122 of the Trade Act of 1974. Under this law, tariffs are capped at 15% and may last only 150 days unless Congress extends them.

NAHB’s Efforts to Combat Harmful Tariffs

For years, NAHB has been leading the fight against tariffs because of their detrimental effect on housing affordability. In effect, the tariffs act as a tax on American builders, home buyers and consumers. Moving forward, NAHB will continue working with all relevant stakeholders to exempt tariffs on building materials, boost sawmill production and increase the domestic supply of timber from federally owned lands in an environmentally responsible manner to help fix building material supply chains and ease costs.