TAUNTON, Mass. — Home builders in Massachusetts are watching newly enacted tariffs on goods from Canada and Mexico with concern, fearful the higher costs to import products like lumber and drywall will drive the expense of building or remodeling a home even higher in an already challenging real estate market.
“It’s a little bit volatile,” architect Michael Chavez told Boston 25 News. “You know, we’re not quite sure what to expect.”
Chavez is building a trio of 3-bed, 2-bath townhomes in Taunton. The homes are expected to be priced in the low $500,000s, but Chavez said any increase in the cost of building materials could lead to a higher sales price when the units hit the market in the Spring. A higher price would push the townhomes out of the reach of some families.
“Right now, there’s already a 14.5% tariff on Canadian lumber,” Chavez said. “So, a 25% increase specifically on Canadian lumber would actually put us up closer to a 40% tariff.”
Companies that import goods often pay a tariff, or tax, on the products they bring into the United States. Economists say companies often make up the difference by passing the cost of the tariff on to consumers at the checkout line.
“Generally, economists are opposed to tariffs becomes it’s only introducing inefficiency,” said Lawrence Yun, Chief Economists for the National Association of Realtors, or NAR.
Both NAR and the National Association of Homebuilders, or NAHB, warn higher tariffs will likely increase housing costs. Online, the NAHB says it is “leading the fight against tariffs because of the detrimental effect on housing affordability.”
NAHB says 70% of all imported lumber in the U.S. comes from Canada, and 71% of gypsum – used in drywall products – is imported from Mexico.
“Tariffs act as a tax on American builders, home buyers, and consumers,” the NAHB says.
Massachusetts is already dealing with high housing prices and a shortage of available homes. The website Realtor.com estimates the current median listing price in Boston is $949,000, though prices can vary across the city and nearby towns.
A recent state study determined 222,000 new homes will be needed in the next 10 years for the state to remain competitive and to help lower costs.
Economists warn tariffs could be a setback to those efforts, at least temporarily.
“If we can boost, say, steel production in the U.S., or if the state of Maine can expand lumber yards, maybe the overall impact will be less,” Yun told Boston 25 News. “But in the short term, it will definitely impact consumers.”
Even President Trump acknowledged tariffs could cause Americans “some pain.” In a social media post, the president wrote: “WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!) BUT WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID.”
The White House maintains tariffs will ultimately be good for the U.S. and consumers. The Trump administration says tariffs will boost U.S. jobs by encouraging investments in U.S. production and manufacturing. Tariffs may also bring countries to the negotiating table, resulting in better trade deals for the U.S. that ultimately bring prices down.
But there are no guarantees. And for builders like Chavez, the uncertainty is a large part of what concerns him.
“Numbers are still fluctuating out of the pandemic,” Chavez said. “And now with tariffs, it makes it even more difficult to try and figure out exactly what’s going to cost what.”
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