New Tariffs From White House Could Harm Housing and Construction

Live Life on Your Terms With Real Estate Investing

Buy It, Rent It, Profit brings together education, tools, and a community of more than 50,000 members—all in one place. Learn about investment strategies, analyze properties, connect with an investor-friendly network, and more.

Hot on the heels of record highs for construction spending and industry growth in late 2017 and early 2018, new tariffs from President Donald Trump have many people worried about the potential fallout.

Chinese steel and aluminum are the specific goods that will now carry an import tax, and that has The National Association of Homebuilders up in arms, according to Business Insider.

Perhaps rightly so, because in 2017 the President also placed tariffs on Canadian lumber. The results? A 31% spike in lumber costs. This has already been making life more difficult inn the construction and homebuilding industries, but steel and aluminum might come at an even bigger cost.

“Given that home builders are already grappling with 20 percent tariffs on Canadian softwood lumber and that the price of lumber and other key building materials are near record highs, this announcement by the president could not have come at a worse time,” Randy Noel, Chairman of the NAHB, said in an official statement.

In America, 90% of new homes have ducted heating and cooling systems pre-installed. These, of course, are made from aluminum.

Sinks, door knobs, refrigerator surfaces, faucets, and many other finishing details are made from stainless steel 304, the most common type of steel.

Large beams used to make structures such as office buildings, hotels, skyscrapers, and countless different types of industrial warehouses are also made from steel. In fact, over 50% of all American-made products require welding of some kind. Two of the most common metals used in welding are steel and Aluminum.

If there is a price effect at all similar to what happened with Canadian lumber, the economic effect could be substantial. Even though prjections show negligible customer price increases, the industry as a whole could begin to falter in the face of dire infrastructure circumstances.

Infrastructure Report Card graded the United States a D+ in 2017, which reflects almost no improvement in four years. If our nation wants to repair roads, rebuild bridges, or establish a modern system of public transportation, we will likely need an influx of funding.

With these tariffs, though, that prospect seems ever further in the future. Though consumers might not immediately feel the keen sting of price spikes, the continued degradation of the currently collapsing American public roadway network will certainly get to them eventually.

Looking forward, it is impossible to say with certainty that tariffs on steel and aluminum will damage construction in such a dire way. That certainly seems to be the common consensus, however.

This article contains general information and does not contain legal advice. Buy It, Rent It, Profit is not a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.


Downloadable Investor's Guide

This A-Z Investing Guide will help you master in minutes the most commonly used industry terms in Real Estate Finance, Syndication, Corporate Entities, Tax Structures and much more!

  • This field is for validation purposes and should be left unchanged.

Year End Holiday Sale:

Get 20% Off All Memberships or Coaching Programs

Sorry the sale is over. See you next time!