The housing market is already in crisis. Homeownership is increasingly out of reach for working- and middle-class families, rents are soaring in major cities, and housing development is slowing due to high interest rates, restrictive zoning laws, and labor shortages.
Now, President Donald Trump’s tariffs on China, Mexico, and Canada threaten to make the situation even worse by driving up construction costs, delaying much-needed housing projects, and further squeezing supply in a market that is already failing to meet demand.
In a matter of weeks, Trump has reignited a global trade war, levying a 25% tax on Mexican and Canadian imports and a 20% tax on Chinese imports—all of which include essential construction materials such as lumber, drywall, appliances, and plumbing fixtures.
Industry estimates suggest that these tariffs could raise the cost of building a home by anywhere from 5% to 20%, which would be catastrophic in a country where the supply of affordable housing is already shrinking.
The impact of tariffs on the housing market extends far beyond the cost of lumber or drywall. The construction industry depends on a vast and interconnected supply chain. A 5–7% increase in materials costs isn’t absorbed by developers—it is passed directly to homebuyers and renters.
Developers facing higher costs are left with three choices: (1) Raise home prices to make up the difference. This will push even more Americans out of the housing market, particularly first-time buyers already struggling with high mortgage rates. (2) Reduce or cancel projects altogether, meaning fewer homes will be built—worsening the supply shortage. (3)Cut costs elsewhere, such as by using lower-quality materials or limiting wages, which could impact safety and worker protections.
In short, Trump’s tariffs function as a hidden housing tax that disproportionately affects working- and middle-class Americans.
California, which is already suffering from a severe housing shortage, is particularly vulnerable. One possible solution to the crisis that has gained in popularity has been accessory dwelling units (ADUs)—also known as granny flats.
These small, affordable homes have become a popular way for homeowners to add rental units or house extended family members. Cities have streamlined regulations to encourage their development, hoping to ease pressure on the rental market.
But Trump’s tariffs could increase the cost of building an ADU by over $6,700—a 5% price hike. That might seem minor, but for homeowners and small landlords who operate on thin margins, it could be enough to discourage them from building.
Multiply that across thousands of potential ADUs, and the result is a direct hit to one of the most effective tools for increasing affordable housing supply.
The tariffs will also take a significant toll on larger multifamily developments, particularly those aimed at low- and middle-income residents. Apartment buildings require huge amounts of lumber, steel, drywall, and fixtures—all of which are now more expensive.
Nonprofit developers and local governments working to build affordable housing will be especially hard hit. Unlike luxury developments, which have more flexibility in pricing, affordable housing projects operate on strict budgets and often rely on federal, state, and local subsidies. If construction costs rise due to tariffs, these projects may be downsized, delayed, or canceled entirely—worsening an already dire housing crisis.
And it’s not just new developments that will suffer. The increased cost of materials will also affect renovations and repairs. Homeowners looking to remodel, landlords maintaining rental properties, and cities repairing public housing will all feel the pinch.
The Trump administration has defended these tariffs as a way to protect American manufacturers, but history tells us a different story. Tariffs rarely work as intended and often backfire—hurting industries that rely on global supply chains.
This is not the first time Trump has experimented with tariffs on construction materials. During his first term, he imposed tariffs on Canadian lumber, which directly contributed to a spike in home prices. The Biden administration later increased duties on Canadian softwood lumber, further compounding the issue. Now, Trump is doubling down on these failed policies—even as housing affordability worsens nationwide.
The reality is that the U.S. does not have the domestic manufacturing capacity to replace imported materials overnight. American lumber, steel, and appliance manufacturers have not significantly increased production, and even if they did, it would take years for supply to meet demand. In the meantime, homebuilders and consumers are left to bear the burden of higher costs.
The housing market is already fragile. High mortgage rates have slowed home sales, builders are pulling back on new developments, and major cities are struggling with homelessness and rental shortages. Trump’s tariffs add yet another obstacle—one that could push more Americans into housing instability.
According to the National Association of Home Builders, the tariffs could add between $7,500 and $10,000 to the price of a new home. While that might not deter the wealthiest homebuyers in Silicon Valley, it will absolutely impact middle-class families in cities like Sacramento, Phoenix, or Houston—where every dollar counts.
For many Americans, an extra $10,000 could be the difference between homeownership and lifelong renting. And for those already struggling to find affordable rental housing, fewer new units mean higher rents and increased competition for a limited supply of homes.
While Trump has promised to cut red tape and open up federal land for housing development, his tariffs and immigration policies contradict these efforts.
Labor Shortages: Nearly 40% of California’s construction workforce consists of immigrants. If Trump follows through on his aggressive deportation plans and restrictions on work visas, the labor shortage will worsen, driving up wages and overall construction costs.
Cuts to HUD: The Trump administration has proposed slashing the Department of Housing and Urban Development (HUD) by 50%. This could delay access to Section 8 vouchers, reduce funding for affordable housing, and make it harder for cities to build shelters for unhoused populations.
Uncertain Trade Policy: Trump’s unpredictable approach to tariffs—announcing new ones, delaying them, then reintroducing them—creates instability for developers and investors. When builders don’t know what to expect, they are less likely to take on major projects.
A Smarter Approach to Housing Policy
If policymakers are serious about tackling the housing crisis, they should be reducing barriers to home construction, not creating new ones.
Instead of trade wars that raise costs, the U.S. should:
- Invest in domestic manufacturing to ensure a steady supply of materials without relying on tariffs.
- Provide incentives for housing construction, such as tax credits for affordable housing developments.
- Reform zoning laws to allow for more multifamily housing and ADUs.
- Expand HUD funding to help low-income families afford housing.
Trump’s tariffs are not just about trade—they are about the future of housing in America. These policies directly harm homebuyers, renters, and builders, making it even harder to address the housing crisis.
Instead of imposing unnecessary costs on working Americans, the administration should focus on policies that increase housing supply and improve affordability. The stakes are too high to play political games with a crisis that affects millions of lives.
The bottom line? If Trump’s tariffs remain in place, housing will become even more expensive and out of reach for everyday Americans—and the dream of homeownership will slip further away.
Turns out that Trump is (sometimes) an “accidental environmentalist” (e.g., clamping down housing production – which usually consists of sprawl, illegal immigration, etc.).