Several tariffs are set to go into effect at midnight, forcing many small business owners tied to home improvement and construction to make a timely decision — increase prices or eat higher costs.
The mere talk of tariffs led to a nearly 1 percent uptick in construction material prices between January and February nationwide, according to the latest monthly survey on material prices by the Associated Builders and Contractors. The trade group's analysis focuses on the producer price index that the U.S. Bureau of Labor Statistics released. That 1 percent uptick is just a taste of what distributors forecast could be coming. Expect prices to rise, they said in an interview, anywhere between a few cents to hundreds of thousands of dollars.
In early February, the Trump administration called for 25% tariffs on products from Canada and Mexico, as well as a 10% duty on imports from China, levies imposed to combat the flow of illegal drugs like fentanyl across the border and unauthorized entries into the United States and to adhere to the president's trade policy agenda. He would later double the tariff on China. The three nations are the biggest trade partners for the housing construction industry.
More tariffs are now at play, including for the countries sharing the biggest trade deficits with the United States. President Donald Trump announced the details of his "reciprocal tariffs" plan on Wednesday afternoon from the White House Rose Garden.
Long-held trade partners have their own tariffs on U.S. goods, and the United States will now charge half of their amounts on their imported products. For example, Vietnam — a country with a 90% tariff on U.S. goods — will face a 46% tariff starting tomorrow.
In addition to Vietnam, the list includes China, Mexico, the United Kingdom, Taiwan, Japan, South Korea, Canada, India, Thailand, Switzerland, Malaysia, Indonesia, Cambodia and South Africa, according to data from the Census Department. In terms of products, aluminum and steel — two critical ingredients for construction — are in the mix.
Builders are already feeling the pain
Builders now face higher quotes from distributors. Joseph Montana, president of Montana Contracting, a real estate developer in Rockland County, north of New York City, said mechanical contractors warned him that the cost of heating and ventilation units would rise by 10% this month.
“I believe there are going to be huge impacts to come from this. The fact that steel and windows are going to be affected, a lot of that comes from Canada,” Montana said. “Even people who have the money to build multimillion-dollar houses, it’s going to knock them out of the box. It could cost them a couple hundred thousand dollars more to build their house.”
Distributors say the level of impact depends on the product and target customer. Take Rhett Cili, owner of the floor and bathroom tile shop Designers Tile in South Florida’s Coral Gables neighborhood. His porcelain, stone tiles and other products come from warehouses as close as Orlando to as far away as California, imported from China, Italy, Turkey, Spain and the United Kingdom, among other places. Already, a producer from the United Kingdom notified Cili of plans to increase a floor tile by a few dollars per tile.
“Us as a distributor, we have to eat that loss, because the [buyer] doesn’t want to pay that higher price,” Cili said, adding that he expects slightly lower profit margins. “It’s minimal, not major.”
For Martin Shepard, CEO of Atlanta-based Reset Roofing, some of his shingles — one from an American manufacturer who pools resources from abroad — added $3 per hundred square feet of shingles, or $1 more per bundle of shingles. Each bundle comes in at 33 square feet, and so a 3,000-square-foot home would cost an extra $90 for roofing services.
Prices will likely go up for those redoing their roof this year, Shepard said. “Roofing prices never go down for a homeowner,” he said, adding uncertainty about the implications of higher prices. “The long-term ramifications of a tariff, we just won’t know what that’ll be.”
Still, Cili said he believes business will remain strong since he caters to those outfitting homes ranging from $3 million to $20 million in Miami-Dade County’s Gables Estates and Cocoplum, as well as communities in the Bahamas and St. Thomas.
“In the high-end world,” Cili said, “people who have money spend money.”
Others fear a significant impact on their products and services, including Steve Falconi, president of All Brands Appliance Parts in Norristown, Pennsylvania. His company primarily sells parts wholesale to other firms that fix appliances or distribute new ones to stores.
“We don’t really have an idea yet how big the impact will be, but we’ve been warned by our suppliers that it will be heavy,” Falconi said. “We’ve sort of been put on notice.”
As an example of a part that tariffs will affect, he cited duct connectors used to vent dryers. They are made of aluminum, which, along with steel, is expected to be strongly affected by tariffs.
House hunters, in particular, can expect prices to rise. Contractors, developers and suppliers said the changes could result in a $9,200 uptick per new single-family home, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index report.
One new homeowner, Adam Blankfort, said he’s starting to sweat over framing his new single-family home.
“I was talking back-and-forth with my builder, asking, ‘Do we need to start ordering certain materials right away?’ and freaking myself out a little bit,” said Blankfort, a real estate agent with Corcoran Baer & McIntosh in Rockland and Orange counties in New York. “After talking to him, I realized that nothing that’s happening right now is enough to stop me from doing what I’m doing. I don’t want to make panicked decisions out of fear of certain prices going up.”
This story was updated on April 3 to reflect that Adam Blankfort is a real estate agent with Corcoran Baer & McIntosh in Rockland and Orange counties in New York.