President Donald Trump's plan to impose a 25% tariff on goods from Canada and Mexico triggered warnings from several trade groups that such a move would drive up the cost of housing, given that a significant amount of key building materials are sourced from our neighboring nations.

Although the president agreed to hit pause on those tariffs for a month after both countries offered concessions to help secure the U.S. boarder, the threat of a surge in prices is looming over several industries.

Following Trump signing the executive order, the National Home Builders Association urged the president to reconsider, with NHBA Chairman Carl Harris noting that "More than 70% of the imports of two essential materials that home builders rely on — softwood lumber and gypsum (used for drywall) — come from Canada and Mexico, respectively."

Days later, the trade group warned lumber costs would spike by 40% – even higher than the 25%, – if the tariff on softwood lumber products from Canada is imposed, because the tariffs would be on top of an effective 14.5 duty rate already in place.

CFRA Analyst Ana Garcia wrote in a note this week that U.S. logging has declined in recent years, and if the tariffs on Canada go through, American logging might not be able to fill the gap.

"Rising framing lumber costs, should tariffs roll out on March 4, 2025, will likely reduce housing starts, worsen affordability challenges for buyers, and increase margin headwinds for homebuilders," Garcia wrote.

National Lumber and Building Material Dealers Association President and CEO Jonathan Paine warned Wednesday that going through with the planned tariffs on Canada and Mexico would "would be potentially devastating to the American economy and the housing market."

"The United States already has an affordable housing crisis and we as a nation must be focused on advocating for measures that reduce construction costs and eliminate regulatory barriers, not policy that discourages or creates new challenges for developing affordable housing," he said in a statement.

Meanwhile, the construction industry is also concerned about the additional 10% tariff Trump place on imports from China this week.

Jim Tobin, CEO of NAHB says that despite the 11th hour reprieve on the tariffs with the 30-day delay, there is still a lot of uncertainty, and warns China, Mexico, and Canada are three of the largest construction suppliers to the U.S.

"There is not a room in your home that doesn't have something from one of those three countries, including doorknobs, light fixtures, framing lumber, and sheathing," Tobin told

Source: foxbusiness.com