Tariffs, Materials Costs, and Market Changes

The tariffs announced by President Trump on April 2 have caused volatility in the markets and left decision makers in many industries—including residential remodeling—wondering about the effect they will have on key construction inputs, including lumber, drywall, and appliances.

The president imposed a 10% baseline tariff on all of America’s trading partners, with the exception of Canada and Mexico, and elevated tariff rates on dozens of nations that will run as high as 50%. The White House claims that South Korea, for example, charges an average tariff rate of 50% on U.S. goods and the U.S. will now charge a discounted reciprocal tariff rate of 25% on South Korean products entering the country.

Then, on April 9, President Trump announced a 90-day pause on the reciprocal global tariffs. The pause drops his country-specific tariffs down to a 10% rate for all trade partners except China. The president raised tariffs on Chinese goods to 145%.

Estimated Cost Increase for Remodelers

NAHB added a question about the tariffs to its survey of remodelers that it conducts as part of the NAHB/Westlake Royal Remodeling Market Index (RMI) for the first quarter of 2025. The survey revealed an average estimated material price increase of 6.9% for a typical remodeling job due to tariffs imposed since Jan. 20.

The RMI for the first quarter posted a reading of 63, down five points from the previous quarter. While the reading of 63 is still in positive territory, this is only the second time since the first quarter of 2020 that the RMI has been so low.

NAHB on What’s Next

NAHB considers the tariff exemptions for Canada and Mexico to be a significant victory, as Canada accounts for roughly 85% of all U.S. softwood lumber imports and represents almost one-quarter of the supply in the United States. The exemption for Mexican products, such as gypsum, concrete, and near-shored appliances, is also important.

NAHB is pleased that the Trump administration recognized the importance of critical construction inputs for housing and chose to continue current exemptions for Canadian and Mexican products, including a specific exemption for lumber from any new tariffs at this time. That said, it is clear the reciprocal tariffs announced April 2 will raise some construction costs.

And despite a win on softwood lumber, the remodeling industry is not yet out of the woods. The Department of Commerce is conducting an anti-dumping and anti-subsidy investigation on Canadian lumber imports. Just days after President Trump’s tariffs were announced, the U.S. Department of Commerce revealed plans to hike the duties on Canadian softwood lumber from 14.4% to 34.45%. Additionally, the White House commanded the Commerce Department in March to investigate the national security impacts of timber and lumber imports.

NAHB economists estimate that roughly 7.3% of all goods used in residential construction originated from a foreign nation last year. The tariffs announced on April 2 will lead to an increase in the cost of steel, aluminum, copper, home appliances, and scores of other imported construction inputs.

A tariff is essentially a tax on imported goods, meaning the importer pays an additional cost for importing such an item from another country. The price increase typically is absorbed by the importer or, in most cases, passed on to the consumer. So, tariffs on building materials raise the cost of construction, and consumers end up paying for the tariffs in the form of higher home prices and remodeling costs.

Building materials costs are up 34% since December 2020, far more than the rate of inflation. NAHB economists anticipate that the tariffs, in addition to pushing costs even higher, will wreak havoc on the building material supply chain, putting even more upward price pressure on building materials.

NAHB is working with relevant stakeholders to roll back tariffs on building materials, boost sawmill production, and increase the domestic supply of timber from federally owned lands in an environmentally responsible manner. Additionally, NAHB is focused on improving building material supply chains and easing costs for remodelers and their clients.