The Trump administration’s tariffs on Canadian, Mexican, and Chinese construction materials spell serious trouble for American renters and homebuyers — especially in cities like Atlanta, where institutional investors are already squeezing housing markets.
“Based on what we’re already seeing in the current data, and what we saw in the last set of Trump tariffs during his first term, there’s no question unaffordability for renters and homeowners is going to increase,” said Anthony Luna, the CEO for Coastline Equity, a California-based real estate investment firm.
President Donald Trump’s escalating trade war will likely hit hardest for families shopping for starter homes and renters seeking low-income housing. That’s because the profit margins are far thinner for lower cost housing than luxury properties, making developers who build entry-level or affordable housing particularly vulnerable.
The Trump administration has already enacted a 20% tariff on Chinese imports and a 15% tariff on worldwide steel and aluminum imports, with 25% tariffs on Canadian and Mexican imports impending in April.
Everything from small hardware — nails, screws, electrical panels, and power outlets — to structural building materials like steel beams and lumber will be heavily impacted by the tariffs, since China and Canada, in particular, are major suppliers.
Homebuilders, multifamily developers, and landlords will pass these rising costs onto consumers, pushing up home prices and rents, industry experts told Atlanta Civic Circle. And as new properties hit the market at higher prices, that will push up the price of existing residences as well.
There’s no question that the tariffs will increase housing costs, Luna said. The only question is by how much? It could take up to a year for residential markets to feel the full brunt of these tariffs, he added.
As a point of comparison, the first Trump administration’s 2017 tariffs on Canadian lumber alone caused a roughly $9,000 spike in the average price of a new single-family home, according to a 2018 estimate from the National Association of Homebuilders.
This time, the impact could be even greater. Real-estate data provider CoreLogic forecasts the latest tariffs could add roughly $17,000 to $22,000 to a new home’s sticker price. The average cost of new construction is $422,000 per housing unit, according to the report, and the median U.S. home price as of October 2024 was $385,000.
The stakes are high: Almost 70% of the softwood lumber products used in U.S. residential construction come from Canada, and roughly 71% of the U.S. supply of gypsum, used to make drywall, comes from Mexico, according to the National Association of Home Builders. Canadian softwood lumber is already subject to a 14.5% tariff, so the additional tariffs impending in April will increase that to almost 40%.
“I regret that I don’t own a lumber or concrete plant,” said Atlanta Mayor Andre Dickens during the Atlanta Regional Housing Forum on March 13. In addition to the squeeze on building materials, he said, “Tariffs are going to make it harder for us to get washers and dryers and kitchen sinks and stuff like that,” — appliances that typically come with rental units and some for-sale residences.
In one indicator, Shaw Industries, a Georgia-based flooring-maker that imports vinyl tile from China and Vietnam, already plans to increase prices on some products by 7% on average, according to Fortune.
“My construction guys tell me that the overall impact on a project, although the tariff may be 25%, is probably going to be close to 5% [higher],” said Marc Pollack, the chair of Atlanta-based EQ Housing Advisors, a nonprofit that builds and renovates affordable housing. “Most of our cabinetry comes from Canada,” he added.
Impacts on affordable housing
The tariffs, plus cuts to federal housing subsidies, will make it harder to finance affordable housing projects.
Cost hikes from tariffs will make it more difficult to put together financing packages for the local governments, nonprofits, and private investors who partner on affordable housing projects, Pollack explained, creating gaps between the available financing and the price-tag increase.
And the Trump administration’s plans to gut federal grant programs that subsidize affordable housing will only exacerbate those new financing challenges, he said — as will Congress’s new spending bill through Sept. 30 that cuts funding by 3%, or about $2.3 billion, for the U.S. Department of Housing and Urban Development (HUD).
“There’s not a project that we touch in the affordable housing world that doesn’t have some form of federal funds,” Pollack said. “Whether it’s housing-voucher programs [from HUD] or otherwise, we’re all at risk. We’ve got to figure out how to do more with less federal capital.”
It’s a “scary reality” that local governments will have to find new ways to fund affordable housing projects — or else let them fall apart — said Matt Elder, Gwinnett County’s housing and community development director, during the Atlanta Regional Housing Forum.
The Trump administration’s budget and staff cuts to HUD could adversely affect the quality of existing housing for lower-income renters as well, since HUD won’t have enough staff to inspect properties with Section 8 housing voucher contracts, according to Luna, the California-based real estate investor. The Trump administration has already fired en masse the HUD staff that enforce fair housing laws.
“The entire American population is going to be affected by each one of these moves — whether it’s a tariff on goods that’s going to create supply constraints like we had during COVID, or the elimination of critical programs that ensure affordable housing is not only built, but maintained in a safe way,” Luna said.
The tariffs, combined with cuts to federal housing grants, could also tighten Wall Street’s grip on housing markets, Luna added, by making housing prohibitively expensive for everyone except wealthier buyers.
“I think we’re going to see an increase in the housing stock owned by more of these large American-based institutions,” Luna said. “None of this will stop Blackrock or Blackstone or the other big American institutions from buying up [single-family properties].”
Great work, Sean! This analysis is the work that our free press should be doing to address the misinformation coming from the authoritarian administration. Please keep it up!
Important, interesting and informative. Thank you ACC and Mr. Keenan.
Js